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.