title: [ARFC] Aave Liquidity Committee Funding Phase VII
author: @TokenLogic
created: 2025-09-17
Summary
This publication presents the Aave Liquidity Committee (ALC) Phase VII Funding request. Since the last update in April, GHO has experienced significant growth across supply, integrations, and ecosystem adoption. This proposal seeks to sustain and accelerate that momentum while lowering the overall budget requirements compared to the previous phase.
Phase VI Update
GHO Supply and Peg
Since the last update, GHO has grown from 200M circulating supply to over 315M. This marks the fastest expansion since launch. Importantly, despite this rapid growth, the peg has never been stronger. Over the last months, GHO has consistently remained within 15 bps of $1.00, reflecting deep liquidity and strong demand.
This stability enabled the ALC to raise the lower end of the GSM bands, further tightening peg control. GSMs are now back above 20M in supply, providing a strong backstop.
Prime Instance
The Prime instance has seen strong adoption with more than 155M GHO supplied, unlocking borrowing opportunities for curated collateral and users and continues to be one of the most important drivers of GHO utility.
The chart below shows GHO’s growth and the resulting revenue being generated from the Prime instance.
Fluid and Base/Arbitrum Deployment
One of the major highlights of Phase VI was the expansion of GHO into Fluid, which has quickly become a cornerstone venue for GHO liquidity and adoption.
On Ethereum mainnet, GHO deposits on Fluid have surpassed 85M, making it the largest destination for GHO across the ecosystem outside of Aave. This growth was achieved thanks to the close collaboration between the ALC and Fluid, with tailored integration strategies, campaigns, and technical coordination ensuring smooth onboarding for users.
Following this success, GHO was also deployed on Fluid on Base and Arbitrum. These deployments provide users with access to efficient, deep liquidity markets for GHO across leading L2s.
Fluid has proven to be an ideal environment for GHO:
- Its architecture supports capital-efficient liquidity provisioning, helping amplify peg stability.
- Its integration with other DeFi primitives enables composable strategies that extend the utility of GHO across ecosystems.
- The design of Fluid markets allows for sustainable growth without excessive incentive spending, making it a cost-efficient growth channel for the DAO.
Altogether, these integrations have positioned Fluid as one of the most effective growth partners for GHO, strengthening its presence on mainnet while also unlocking new user bases on Base and Arbitrum.
Centralized Exchange Integration
A landmark milestone during this phase was the first-ever centralized exchange listing of GHO on Bitget. This integration represents a significant step forward in expanding GHO’s distribution beyond purely DeFi-native channels and into a broader, global user base.
The listing on Bitget has created:
- New entry points for retail and institutional users to access GHO directly without relying on decentralized liquidity routes.
- Increased visibility for GHO within the competitive stablecoin landscape, positioning it alongside established assets on a major trading venue.
- A diversified source of liquidity, complementing DeFi pools and helping to reinforce peg stability by broadening the set of arbitrage and trading flows.
This listing was made possible through coordinated efforts between the ALC and Bitget’s listings team, demonstrating how collaboration between DeFi protocols and CEXs can create meaningful growth opportunities.
Importantly, this is not a one-off milestone but the first step in a broader CEX integration strategy. Additional listings are in active discussion and expected before year-end, which will further strengthen GHO’s accessibility, enhance liquidity depth, and expand its presence into entirely new user demographics.
On-chain Liquidity
GHO on-chain liquidity has now surpassed $130M across all networks where it is deployed, mainly leveraging Balancer v3 pools and Fluid integrations. This provides users with consistent, deep markets for GHO trading and arbitrage.
| Balancer GHO/USDC/USDT | Fluid GHO/USDC |
|---|---|
 |
 |
Avalanche Launch
The Avalanche deployment was another major highlight, supported by a dedicated incentive program. This initiative attracted more than $48M deposits into the Aave Avalanche instance, underscoring GHO’s ability to scale across chains.
sGHO Growth
During this phase, stkGHO was sunset and replaced by sGHO, the new savings rate mechanism. Since launch, sGHO supply has grown from 140M to over 180M, reflecting strong demand for a native yield-bearing stablecoin.
The ALC is actively working with multiple DeFi and CeFi partners to integrate sGHO as a reserve asset or savings product. This positions sGHO as one of the key pillars of GHO adoption going forward.
Path to Profitability
Beyond growth, GHO is steadily advancing towards profitability for the DAO. By extending Phase VI to five months instead of three, the ALC effectively reduced cost-per-unit GHO growth, ensuring more efficient capital allocation.
As circulation continues to expand, the impact of incentives becomes increasingly efficient. Every new GHO minted and adopted into the market dilutes the relative cost of the incentive budget, meaning that the same level of spend supports a larger base of supply. This compounding effect brings GHO closer to reaching break-even on incentive programs, after which the protocol can generate net positive returns for the DAO through facilitators, fees, and ecosystem integrations. In other words, growth itself is the path to profitability: as GHO scales, the unit economics improve naturally while the marginal cost of adoption falls.
Phase VII Lookahead
Remote GSM
The upcoming remote GSM architecture is nearing readiness. This will enable seamless growth of GHO on new networks by allowing prefilled GSMs to act as local liquidity anchors without relying on inefficient bridging.
New L2 Deployments
GHO will soon be deployed to three new important L2s: Plasma, INK, and Linea. These ecosystems are poised to become major hubs of activity and will provide GHO with new markets and user bases.
Centralized Exchange Expansion
Following Bitget, the ALC is working with additional centralized exchanges to list GHO before the end of the year. These integrations will open further distribution channels and expand GHO’s presence beyond DeFi.
sGHO ERC4626 Upgrade
sGHO will be upgraded to an ERC4626-compliant version, streamlining integrations across the ecosystem. This upgrade will also enable flexibility for updating the savings product in line with the ASR proposal.
Specification
Create an allowance enabling the ALC to withdraw 2,500,000 aEthLidoGHO from the Prime instance.
This represents a reduction from Phase VI’s budget, reflecting both the maturity of GHO and the DAO’s other growth priorities. The lower budget is designed to balance sustaining ongoing initiatives with funding new integrations on emerging networks.
ALC Ethereum SAFE: 0xA1c93D2687f7014Aaf588c764E3Ce80aF016229b
Disclosure
TokenLogic receives no payment for this proposal.
Next Steps
- Gather feedback from the community.
- If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
- If Snapshot outcome is YAE, an AIP will implement this proposal.
Copyright
Copyright and related rights waived via CC0.