[ARFC] Deploy remoteGSM for GHO on X Layer

[TokenLogic]

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title: [ARFC] Deploy remoteGSM for GHO on X Layer
author: @TokenLogic
created: 2024-09-26

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Summary

This ARFC proposes deploying an instance of the remoteGSM for GHO on X Layer.

Motivation

X Layer is expected to act as both a payment-focused network and a DeFi hub, creating new avenues for user onboarding, real-world adoption, and capital efficiency.

Deploying GHO concurrently with the Aave instance on X-Layer ensures that GHO has every chance of becoming foundational to DeFi and payments infrastructure on a chain optimized for Money 2.0 utility.

The goal is to establish GHO as a key stablecoin within X Layer’s ecosystem from inception, facilitating reward programs, liquidity incentives, and seamless integration with the upcoming Aave deployment.

Specification

Mint and bridge 25,000,000 GHO

Mint 25M GHO from the GhoDirectFacilitator and bridge to XLayer via CCIP to XLayer’s Collector.

TokenPool Configuration:

• Bucket Capacity: Increase by 25M GHO
• Inbound Capacity: 5M GHO
• Outbound Capacity: 5M GHO
• Refill Rate: 1,000 GHO/sec

CCIP Bridge Configuration

Deploy instance of the AaveGhoCCIPBridge on X-Layer. Configure Mainnet instance to be able to send minted GHO to X-Layer.

Deploy GSM

Parameter	Value
stataUSDG Exposure Cap	20M
Freeze Lower Bound	$0.990
Freeze Upper Bound	$1.010
Unfreeze Lower Bound	$0.995
Unfreeze Upper Bound	$1.005
Buy GHO Fee	0%
Sell GHO Fee	0.10%
Gho Reserve Limit	25M

GhoReserve

Deploy GhoReserve on X-Layer to hold bridged GHO initially.
Configure stataUSDG RemoteGSM as an entity with a draw capacity of 25M GHO.

GHO Steward Configuration

GhoAaveSteward

• updateGhoBorrowCap: ±100%
• updateGhoBorrowRate: ±5% on optimal usage ratio, base variable rates, slopes
• updateGhoSupplyCap: Up to +100%

GhoGsmSteward

• updateGsmExposureCap: ±100%
• updateGsmBuySellFees: ±0.5% per side (FixedFeeStrategy)

Both stewards remain callable only by the GHO steward.

Budget

To bootstrap GHO, funding from Ethereum will be bridged to X Layer via CCIP and used to provide initial liquidity in Aave. Over time it will be withdrawn to support growing GHO’s adoption across the broader X Layer ecosystem via Aave and other protocols.

Create allowance for ALC, 1M aEthLidoGHO from Aave v3 Prime on Ethereum:

• Asset: aEthLidoGHO: 0x18eFE565A5373f430e2F809b97De30335B3ad96A
• Amount: 1M
• Spender: ALC0xA1c93D2687f7014Aaf588c764E3Ce80aF016229b
• Method: approve() aEthLidoGHO on the Aave Collector contract to the ALC address

Budget for boostrapping liquidity shall be processed separately as part of a general funding update.

Disclosure

TokenLogic does not receive any payment for this proposal.

Next Steps

1. Publish an ARFC to continue gathering community and Service Providers feedback.
2. Escalate proposal to ARFC Snapshot.
3. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.

Copyright

Copyright and related rights waived via CC0.

[LlamaRisk]

Summary

LlamaRisk supports launching GHO on X Layer concurrently with the initial Aave deployment. The strategy and parameters proposed by TokenLogic align with the measured approach taken for previous GHO expansion initiatives, allowing GHO to scale responsibly in response to demand.

The planned liquidity incentives, bootstrapped by the 2M aEthLidoGHO budget, will be crucial for establishing deep liquidity and sustaining the secondary market peg for GHO on X Layer. Furthermore, the implementation of a RemoteGSM will provide a robust stability buffer from inception, supporting GHO’s gradual deployment on the network.

The Cross-Chain Progress

Since GHO’s cross-chain deployments began, GHO has grown to 296M circulating supply, with ~34M GHO residing on the supported L2s. The Avalanche market has continued to expand over the past month, while the Base market has continued to contract. All other markets remained stable.

Source: TokenLogic GHO Dashboard, October 2, 2025

Source: TokenLogic GHO Dashboard, October 2, 2025

Current Health of GHO

GHO’s secondary market peg saw a temporary discount of up to 30 bps in late July. Adjustments to the GHO borrow rate and the Aave Savings Rate were effective in containing outflows and reducing market pressure. GHO has since returned to trading within 10 bps (0.1%) of its peg.

Source: TokenLogic GHO Dashboard, October 2, 2025

On Ethereum, GHO currently possesses a 35M sell buffer within 10 bps (0.1%) price impact, suggesting that a selling pressure of more than 10% of the supply would be needed to materially destabilize the peg.

Potential on X Layer

Currently, GHO maintains a healthy collateral ratio of 3.6, backed predominantly by high-quality liquid assets like WETH, ETH LSTs, and wrapped BTC. With the Aave X Layer market being deployed, the GHO risk profile would change insignificantly, as the same asset types would be onboarded to that market.

Source: TokenLogic GHO Dashboard, October 2, 2025

The proactive GHO DEX integrations and incentive programs will further accelerate GHO’s adoption within X Layer’s ecosystem, improving its utility across various yield venues. Due to the fairly low current adoption of stablecoins on X Layer, GHO also has an opportunity to capture a large part of the stablecoin share on X Layer.

Parameter Recommendations

We support the parameter recommendations put forth by TokenLogic. The 50M Facilitator Cap is sufficient to support anticipated inflows, and a 20M initial mint is a conservative approach given the current GHO peg stability. During the AIP stage, the initial mint amount could be adjusted based on the peg’s stability at that time.

Regarding the GSM parameters, we observe the introduction of a non-zero GHO burn fee. This is intended to create a GHO stability buffer within a 15 bps peg range, making GHO burns profitable if GHO depegs by more than 15 bps. While we support this mechanism, we note that other GSM deployments, such as the GHO deployment on Plasma, have proposed a 0 fee setup. For consistency, we would appreciate unifying these parameters at the time of deployment. The risk implications and further details regarding the 0 fee setup were discussed in a separate thread earlier this year.

Disclaimer

This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work. The information provided should not be construed as legal, financial, tax, or professional advice.