Title: [ARFC] GHO Stewards - Adjust GHO Borrow Rate Ethereum v3
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-09-12
Summary
This publication proposes decreasing the GHO Borrow Rate on Ethereum from 5.00% to 4.25%.
Motivation
For users without any stkAAVE holdings, GHO is currently more expensive than alternatives on Aave v3 Ethereum.
The weighted average borrow cost of GHO is 4.58% is more expensive than USDT and slightly lower cost than USDC at spot market conditions. The borrow rate differential is not sufficient for users to migrate there debt holdings to GHO.
With GHO Exposure Caps of both USDC and USDT GSMs at capacity, users are unable to mint GHO. As a result, new GHO supply can only be achieved by borrowing GHO on Aave v3 Ethereum. Whilst GHO has been growing consistently since the most recent Borrow Rate reduction, we continue to observe users acquiring GHO on exchanges and depositing into stkGHO. stkGHO has increased from 69.18% on 2024-08-31 to 71.92% on 2024-09-12 of GHO supply.
This publication proposes reducing the GHO borrow rate by 0.75% to encourage new GHO being borrowed into supply. We expect users to migrate to GHO debt which is especially attractive when GHO is trading above $1.00 across Ethereum and there being 16M of funds in the GSM ready to support the peg.
Specification
The GHO borrow rate is to be revised as follows:
| Description | Current | Proposed | Reduction |
|---|---|---|---|
| Borrow Rate | 5.00% | 4.25% | 0.75% |
Next Steps
- Using the Direct-to-AIP process an AIP will be submitted to implement the proposal.
Disclaimer
Chaos Labs, ACI, TokenLogic and karpatkey have not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0.