[ARFC] GHO CEX Earn Incentive Program

[TokenLogic]

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title: [ARFC] GHO CEX Earn Incentive Program
author: @TokenLogic
created: 2025-06-05

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Summary

To maximize the impact of GHO’s upcoming listings on Bybit, Bitget, and other centralized exchanges (CEXs), this publication proposes engaging a market maker to provide spot liquidity and allocating funds to a CEX Earn program to drive broader adoption of GHO.

Motivation

Listing GHO on centralized exchanges serves as a strategic lever to broaden its adoption by tapping into a wider and more diverse user base. It opens a powerful new distribution channel, allowing the Aave DAO to strengthen GHO’s market presence and accelerate its global reach.

• Expanded Audience: Access to retail and institutional users who primarily operate on CEXs and are less familiar with decentralized and on-chain stablecoins.
• New Utility: Enables GHO to be used as collateral in perpetual contracts and other financial products not currently available within DeFi.
• Enhanced Liquidity and Visibility: CEX listings improve global accessibility and strengthen GHO’s brand recognition through higher trading volumes and broader market exposure.

While several stablecoins are already entrenched on centralized platforms, GHO’s success will hinge on delivering a compelling value proposition that differentiates it from more established alternatives. By leveraging the Aave Protocol as a native yield engine, GHO can replicate the successful strategies of stablecoins like USDtb and USDe, channeling yield from the GSMs directly to CEX users, incentivizing them to hold and use GHO.

Earn Campaign Structure

To accelerate GHO’s adoption, we propose a user acquisition incentive that rewards users for simply holding GHO on the CEX—regardless of how or where it’s used on the platform. This mechanism mirrors the experience of depositing into an on-chain Earn vault, allowing users to earn yield passively while maintaining full flexibility.

By offering native yield on CEX-held GHO, we aim to drive broader usage across the exchange’s ecosystem—spanning spot, derivatives, and Earn products—while positioning GHO as a competitive and attractive alternative to existing stablecoins.

The GHO Earn Campaign offers the following features:

• sGHO-style Airdrop Model: A proxy system that tracks GHO balances on participating CEXs and rewards users on a weekly basis, mimicking the on-chain sGHO model.
• Incentives Distribution: Rewards will be distributed based on GHO balances held in eligible accounts on partner exchanges. Users will receive a weekly airdrop direct to their balance to create a savings account user experience.

This model encourages sustained holding of GHO while aligning with familiar incentive mechanisms used in CEX environments.

By offering a competitive yield that accelerates GHO’s broad adoption, we are able to advocate for further integrations beyond Spot trading and Earn Platforms. Through offering greater utility such as Margin trading and Perpertuals, we expect to achieve higher retention rates when rewards are reduced.

Market Maker

TokenLogic is working with Market Makers to provide Spot trading liquidity across various CEXs. Each potential partner was recommended by multiple CEXs and upon a thorough review, a select few have been short listed to those with a proven track record for providing stablecoin Spot market liquidity.

TokenLogic will continue to work with various Market Makers to source and provide liquidity. With a preference for Market Makers that provide their own inventory, the Aave DAO is likely to provide working capital to sustain the CEX. A combination of trading firms and Market Makers will likely be engaged in varying capacity with the goal to ensure peg stability and sufficient liquidity enabling broader integration across the CEX platforms.

Objectives

Listing GHO on centralized exchanges expands its reach to a broader user base and creates a new distribution channel, enabling the Aave DAO to accelerate adoption and increase market presence.

The goal of this initiative is to deliver the following objectives over a 4 to 6 month period:

• $150 million new GHO supply;
• GHO Spot trading pairs;
• Earn platform integration;
• Margin trading; and,
• Collateral status for multi-asset perpetual trading;

@TokenLogic will engage a Market Maker to provide Spot liquidity sufficient to enable GHO to be included as collateral on Multi-asset perpetual positions. For reference USDtb was able to acheive such status within a few weeks of listing on ByBit.

Revenue

With USDT/GHO Spot trading liquidity enabling users to swap USDT for GHO, the USDT will be received and used to Mint GHO via the stataUSDT GSM. This USDT is then deposited into Aave v3 where it will earn the deposit rate and provide the DAO with additional revenue.

The Aave DAO generates revenue via the deposit rate on Aave Protocol plus the Reserve Factor. However, to amplify the adoption of GHO, the Earn program is to provide a yield exceeding the Aave deposit rate to attract meaningful growth in line with the objectives mentioned above. Therefore the program is expected to incur a cost during the bootstrapping phase which will be recovered during the later phases as it transitions into a sustainable integration.

Funding

The Earn program’s yield is expected to exceed the Aave Protocol deposit rate and be competitive compared to other offerings in the market.

In administering the program, GHO holders will received GHO airdrop to them each week. Users receive a fixed yield that is adjusted on a weekly cadence to be loosely correlated with the broader market. ie: Week 1 could 6% and Week 2 6.25%. However, to limit budget exposure there is a TVL target, once exceeded the yield is diluted to avoid over spend.

Whilst Aave generates revenue from the GSMs and in parallel distributes GHO to CEX users, there are both timing considerations and difference in yield to consider. By creating a separate budget, this streamlines the operational burden for sustaining the program. Revenue generated by the GSMs will accumulate independent of the rewards being distributed.

The true cost of the program is the difference between revenue generated from the new GHO circulating supply and the rewards distributed to bootstrap GHO across the CEXs. TokenLogic will provide a dashboard to track overall spend and revenue generated from activities linked to this program.

Specification

To execute this initiative, we are requesting a funding allocation of 5M GHO from the DAO treasury to be used for:

• Weekly reward distribution (denominated in GHO or an equivalent stable asset).
• Technical integration and CEX collaboration costs.
• Marketing support to promote GHO onboarding and listings.

Proposed budget: 5M GHO over 4 to 6 Month period

The initial Allowance is for 5M GHO from Prime instance.

• Asset: aEthLidoGHO 0x18eFE565A5373f430e2F809b97De30335B3ad96A
• Amount: 5M
• Spender: AFC 0x22740deBa78d5a0c24C58C740e3715ec29de1bFa
• Method: approve() aEthLidoGHO on the Aave Collector contract to the AFC address.

To facilitate the program, the following assets are to be swapped to GHO.

Ethereum	Amount	Swap
USDT	2.50M	GHO
USDC	2.50M	GHO

Next Steps

1. Gather feedback from the community.
2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
3. If Snapshot outcome is YAE, an AIP will implement this proposal.

Disclaimer

TokenLogic does not receive any payment for this proposal.

Copyright

Copyright and related rights waived via CC0.

[ST0X]

Hi,

The current GHO token design and peg status does not warrant such big amount of incentive program. 5mio GHO rewards to CEX users is equal to around 5mio/180mio=3% of total GHO circulating.
After the umbrella activation, I anticipate funds outflow from GHO as the rewards for Umbrealla staked GHO stake is low and the sGHO rates(7%) is not very attractive comparing to the previous stGHo rates in safety module(11%). The more urgent task, as an defi protocol, shall be retain the exiting GHO users on Chain and revamp/fine tune the token design.
After the on Chain demand and peg is stabilized, then the protocol can deploy more resources to attract users from CEX. In general, CEX users are another type of user base comparing to exiting GHO holders. if you look at the incentive program in CEX’s history, usually after the CEX incentive program ends, the CEX users will exit from holding the token.
To add on- the collateral for perpetual in top exchange is dominated by USDT BTC ETH plus some USDC. even some exchange allows GHO to be collateral, it will not have any material impact to derivative traders as these holding big positions will not keep GHO as their main collateral. As a big GHO holder, I feel this is the wrong directions for GHO. The margin trading and collateral status is something that come naturally once GHO is matured and well received on Chain.

[sid_areta]

Hi @TokenLogic, thanks for the proposal - it’s very interesting. The defined goals seem ambitious and well-defined, and if we reach $150M in new GHO supply, it’ll be a big win. A few questions:

• What is the expected retention of the GHO supply once incentives run out? Or is there a plan for incentives to be more “perpetual” and self-sustaining if the revenue generated from the new supply exceeds the rewards distributed to bootstrap it? As @ST0X mentioned, CEX users might exit from holding the token once rewards run out, and it’s important to design a strategy to tackle this from the get-go.
• What are the factors you’re using to pick the market makers?
• What is the main target audience of the Earn program? Is it retail or institutional users, and what is the marketing strategy you aim to use to attract these users?

Overall, very supportive of the direction and the goal - huge props for defining such a program!

[Kitten]

It’s a good initiative if it can be executed promptly. Having worked extensively with MMs and CEXs, some of them are asking for fortunes for listing. It would be useful to set a cap on the share of the 5 million GHO allocated to them

[EzR3aL]

I do think going this way will allow GHO to grow big. We can see there is a shift right now happening where the importance of institutional money over retail money is way more important. Big player like Blackrock are entering it and we have a chance here to join this. GHO will only be interesting if it has a decent size of Marketcap to these kind of player.
While it’s hard to predict how strong the user retention will be, I do think it’s important to try and go this way. Just offering yield onchain in different protocols will not grow GHO as strong anymore. By going the CEX way we may be able to have a smiliar success story to Ethena when their stablecoin(s) were accepted on different exchanges.
I am in favor of this, but would like to track it to see the real effect of it.

[LlamaRisk]

Summary

LlamaRisk supports the next step of expansion for Aave’s GHO stablecoin. We believe that bootstrapping GHO’s supply flows on CEXs would not only provide an additional growth opportunity but also enable new strategies and use cases for GHO. This is particularly important for the stability of GHO since the staking module was deprecated in favor of sGHO. We are also aware that expanding GHO to centralized venues comes with a need for incentives, although would again indirectly support GHO’s secondary market stability.

We remain optimistic of the stablecoin’s continued liquidity improvements, and the reworked yield opportunities offering. We will continue monitoring the situation to support safe GHO expansion.

Current State

Since early 2025 GHO has undergone an extended growth period, even as broader market conditions have been fluctuating. While undergoing this growth, GHO’s secondary market peg has remained stable, with stability mechanisms, such as GSMs, exhibiting successful functioning. During this period, GHO staking in the staking module has been deprecated in favor of Umbrella module and risk-free sGHO staking functionality.

Supply

Even though in the past weeks there has been a downturn in total GHO supply, the stablecoin remains on a general long-term growth path, which new product offerings, and initiatives such as the proposed CEX deployments are expected to reinforce. GHO’s total supply has reached a peak of 255M in the month of May, currently down to 213M.

Source: TokenLogic GHO Dashboard, June 8, 2025

GHO’s expansion across multiple chains, including Base, Arbitrum, and Lens, has met with varying degrees of success. Arbitrum initially served as a strong market for GHO; however, once incentives expired, the supply did not remain, likely due to a lack of alternative yield venues on the chain. In contrast, Base has achieved more stable and sustained growth, driven by incentivized GHO borrowing and a richer ecosystem of yield opportunities, such as those offered by Spectra. The key test will be what proportion of this supply remains after the current incentives conclude.

Liquidity

GHO’s liquidity situation has continued improved drastically, with 70-80M GHO now available in the liquidity pools and a total liquidity TVL of ~100M. On Mainnet, 23M GHO can be sold for other stablecoins within a 2% price impact, suggesting an expanded liquidity buffer.

Source: TokenLogic GHO Dashboard, June 8, 2025

The liquidity is concentrated mainly on Balancer and Curve, where GHO is paired with USDC, USDT, USR, and crvUSD stablecoins.

GHO Safety Module Deprecation

The recent deployment of the Umbrella module initiated a significant change for GHO stakers. The former stkGHO in the Safety Module has been transitioned into an sGHO vault, which offers a smaller but entirely risk-free yield. This change in the risk-reward profile prompted a rebalancing, as some stakers migrated to other assets. This outflow caused the total staked value to decrease from a high of 175M to 140M and partially contributed to the recent reduction in GHO’s total supply.

Source: TokenLogic GHO Dashboard, June 8, 2025

Despite these outflows, the new sGHO vault and the Umbrella module have retained significant demand, successfully keeping the majority of ecosystem participants engaged with Aave.

CEX Integration Perspective

The planned CEX integration would enable yet another yield opportunity for GHO holders and in the long run would potentially result in GHO’s acceptance as a collateral asset used in margin accounts. It would enable further growth, however comes with certain risk attention points.

Stability Risk

Maintaining the GHO peg is the primary consideration. CEX adoption would intensify GHO flows between chains and venues. While this is a sign of a healthy market, it could create temporary liquidity imbalances in DEX pools. Furthermore, if CEX market makers fail to provide sufficient liquidity, a de-peg event could trigger arbitrage activity that further strains on-chain pools. At its current scale, GHO’s deep on-chain liquidity is well-equipped to absorb these increased flows and mitigate stability risks. It is important to ensure sufficient liquidity levels in the future.

Liquidity Fragmentation Risk

Another concern is that a portion of GHO’s deep liquidity on DEXs could migrate to CEXs, fragmenting the market. Nonetheless, the proposed strategy directly addresses this by concentrating liquidity incentives on-chain while allocating only a small portion to bootstrap CEX listings. This approach is designed to preserve the stability of the core on-chain market. As long as GHO’s DEX liquidity remains at or above current levels, the risk of harmful fragmentation is considered low.

Legal Considerations

Securing a listing for a decentralised, non-custodial stablecoin on a major centralised exchange is far more than a matter of commercial terms. Stablecoins (including decentralized/algorithmic variants) may be classified as e-money, collective investment schemes, deposits, securities, derivatives, or payment instruments depending on their design and jurisdiction. Therefore, an exchange must prove that any stablecoin it offers is either duly authorised or demonstrably exempt under the local framework, is not a security, and is governed by rigorous reserve, redemption, disclosure and anti-money-laundering safeguards.

The precise hurdles vary with the exchange’s own licensing perimeter. In practice, the EU’s MiCA regulation is the universal choke-point: tokens lacking an identifiable issuer sit outside Titles III and IV, so crypto-asset service providers face an uphill battle if they wish to list them. A CASP may still admit such assets, but only if it can satisfy MiCA’s overarching prudential and conduct standards on its own initiative. Dubai’s Virtual Assets Regulatory Authority is moving in lock-step with Brussels, demanding EU-calibre disclosures and proof-of-reserve feeds from algorithmic or over-collateralised coins.

For now, some top-tier venues do offer trading in decentralised stablecoins, yet those markets are almost invariably routed through lightly regulated hubs— e.g. El Salvador or Seychelles. Access for users in tightly supervised centres such as the European Union, the United Kingdom or Hong Kong is already constrained and will soon become commercially unfeasible once MiCA, the FCA’s digital-settlement-asset rules and Hong Kong’s “issuer-and-trustee” model are fully in force.

The most efficient path to a compliant listing starts with a focused exchange strategy. Identify the venues where GHO must trade, then obtain their detailed onboarding checklists at the outset. If a jurisdiction-specific legal characterisation of GHO is required, engage a global law firm able to deliver a coordinated opinion set spanning each core market. LlamaRisk can assist in selecting appropriate counsel and will collaborate with both the firm and exchange compliance teams to maximize the likelihood of approval while minimising listing friction.

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.

[kpk]

Thanks for putting this together, @TokenLogic. This is a meaningful step toward expanding GHO adoption via CEXs, and we’re aligned on the high-level objectives.
That said, there are a few areas that could benefit from additional clarity and detail:

1. Market Maker structure
It would be helpful to clarify which market makers are being considered, the expected amount of working capital, and how custody and reporting (e.g., proof of reserves) will be handled.

2. GSM interaction
The role of the GSM remains unclear—specifically how USDT from CEXs will be routed, who controls these flows, and how fluctuations in GSM TVL could impact the program’s sustainability.

3. Budget breakdown
A clearer breakdown of the proposed 5M GHO allocation—across market making, CEX user incentives, and marketing—would help inform a more constructive discussion and enable better decision-making. It would also be helpful to outline what the marketing budget is intended to cover and who would be responsible for its execution.

We see strong potential in this initiative and are happy to collaborate further, particularly on supporting MM selection, as kpk has done for several DAOs we work with.

[TokenLogic]

Thank you to everyone who provided thoughtful feedback and raised important points. Below are detailed responses to each of the key themes and specific questions raised by community members.

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1. Retention and Incentive Sustainability

(@sid_areta, @ST0X, @EzR3aL, @Kitten, @LlamaRisk)

We agree that retention after incentives end is a critical metric for success.

• Retention Strategy: Our goal is to bootstrap adoption and GHO visibility across CEXs, but the long-term sustainability depends on unlocking utility (margin, perp collateral, trading pairs) and ensuring that GHO remains competitive as a stablecoin.

• Incentives Design: Yield offered to CEX users is not perpetual. It will taper off as utility, circulating supply and integrations ramp up. To this end, we are prioritizing high-quality listings with supportive venues that are open to longer-term GHO utility.

• Fixed APR Campaign: The proposed campaign uses a targeted APR approach for holding GHO, which avoids the inflated and unsustainable APRs. Rewards are distributed based on actual GHO supply held on CEXs, ensuring cost-conscious allocation aligned with performance.

• Cost Efficiency First: This strategy ensures we only spend against verified GHO holdings, minimizing waste and focusing on velocity, retention, and liquidity provisioning.

• Long-Term Sustainability: Looking ahead, if a significant portion of GHO on CEXs is minted via GSMs, we can explore transitioning to a yield-sharing model where part of the GSM yield helps fund a longer-term CEX Earn program. We’re also exploring if sGHO functionality could be integrated directly by CEXs to provide native passive yield without a separate reward layer.

• Benchmarking: We’ve studied prior CEX Earn campaigns, including Ethena’s approach. Programs that combined earn mechanics with active utility had far greater retention than passive rewards-only campaigns.

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2. Market Maker Selection and Structure

• Selection Criteria: We have shortlisted MMs based on:

  • Strong CEX relationships
  • Proven experience with stablecoin markets
  • Preference for deploying their own inventory
  • Track record of maintaining tight spreads and price integrity

• Working Capital and Hurdle Rate Structure:

  • As the selected Market Maker will be providing its own inventory, they have requested a hurdle rate tied to the capital they commit to GHO markets.

  • If their MM activity exceeds the hurdle rate, it’s a win-win outcome.

  • If the realized performance is below the hurdle, a portion of the program budget will be used to cover the shortfall, ensuring their capital remains productive.

  • The hurdle rate will be set in a similar range to what liquidity provising in DeFi looks like. It ensures that the DAO is not overpaying for the services provided.

  • The chosen Market Maker will also be subject to specific KPIs related to GHO strengh, peg, distribution and expansion. TokenLogic will work closely with the MM to ensure GHO keeps a tight spread, is competitive with other centralized stablecoins and ensure that liquidity provision is well performed.

  • Peg Hedging Strategy : We are collaborating with market makers to explore GHO peg hedging strategies using productive collateral and GHO debt. This could lead to proposals for new eModes to enhance capital efficiency and unlocking new utilities for GHO.

• GSM Access for Market Efficiency:

  • The selected MM will be granted direct access to a GSM, allowing them to safely and quickly arbitrage any peg deviations across CEXs and DEXs.
  • This not only enhances GHO price stability but also ensures that CEX users can buy and sell GHO directly through the GSM, benefiting from tighter spreads and more reliable execution.

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3. GSM Interaction

• USDT/USDC inflows from CEX users trading into GHO will be used to mint GHO via the GSMs (e.g., stataUSDT).
• This newly minted GHO will fund user rewards and simultaneously earn yield for the DAO by depositing stablecoins into Aave.
• A dedicated dashboard will visualize GSM inflows, mint volume, and yield generation.

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4. Liquidity Fragmentation & Peg Concerns

• Preservation of On-Chain Liquidity: This program is funded separately from existing DEX incentives to prevent erosion of core on-chain liquidity.
• CEX Incentives Are Additive: We see CEXs as a growth and distribution channel, not a replacement. On-chain users and yield remain the foundation of GHO.
• It is worth noting that in the future we have the option to combine the budget of the ALC and CEX Earn program into a single GHO incentive budget. This is not applicable yet but will be kept in mind for when we enter the consolidation state of GHO growth on CEXs.

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5. Legal and Regulatory Realism

• We recognize the evolving regulatory landscape for stablecoins and appreciate LlamaRisk’s insights.
• Listings will focus on jurisdictions with manageable regulatory hurdles

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6. Program Tracking and KPIs

Yes, a dedicated dashboard from TokenLogic will track:

• GHO minted via GSMs
• TVL in Earn programs
• Active participants
• Weekly rewards distributed
• On-chain vs CEX balances
• Peg deviation and liquidity health

This will enable community oversight and real-time performance evaluation.

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Closing Note

We deeply appreciate the community’s input and scrutiny. Our intent with this program is to scale GHO in a way that expands its reach without compromising its on-chain integrity.

The CEX Earn campaign is designed to bootstrap growth, while aligning with a long-term vision for GHO as a systemically important stablecoin across both DeFi and CEX environments.

[0xlide]

@TokenLogic

We’ve studied prior CEX Earn campaigns, including Ethena’s approach. Programs that combined earn mechanics with active utility had far greater retention than passive rewards-only campaigns.

Could you share more details about this research?

[bonguito]

Hi! Thanks for the proposal.

I’m curious if there is any plan or thought about promoting DEX liquidity in a similar way. While I’m against promoting CEX liquidity in a “fair” way (with rate similar or slightly below AAVE saving rate), my first impression for GHO is that it should be primarily focus on-chain, as most of GHO users will be AAVE users and experimented DEFI users. In that way, I think promoting aligned DEX pools could be more beneficial for GHO, helping on improving liquidity for some pools (i.e.: GHO/USDS/USDC/USDT…) and offering an attractive option for people depositing liquidity there, also helping to keep GHO peg stronger. Because personally I find it can be harmful for liquidity on DEX pools if sGHO rate is considerable higher than pool APY; and if we compare to USDS, having a value-accrued asset (sUSDS) allows vesting the DSR while having that on a pool; but if the interests need to be claimed externally as with sGHO, that makes harder for distribution.