[ARFC] GHO Stewards - GHO Parameter Adjustments

[karpatkey_TokenLogic]

---

title: [ARFC] GHO Borrow Rate Update
author: @karpatkey_TokenLogic + @ACI + @ChaosLabs
created: 2024-7-14

---

Summary

In response to recent market events, this publication proposes reducing the GHO Borrow Rate by 100bps.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Rate and grant visibility to the Aave Community.

Borrowing rates for USDC and USDT are meaningfully lower than the current non-discounted GHO borrow rate. The image below highlights the relative cost of GHO debt relative to USDC and USDT. The GHO Stewards intend to reduce the GHO Borrow Rate by 100 bps periodically, until GHO’s Borrow Rate aligns with broader market conditions.

This is the fourth implementation of the -100 bps adjustment.

Specification

The GHO Stewards are to reduce the Borrow Rate by 100 bps.

Description	Current (%)	Proposed (%)	Delta
Borrow Rate	8.00%	7.00%	-100 bps

Next Steps

We will closely monitor market behavior and evaluate this decision with every adjustment.

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.

[karpatkey_TokenLogic]

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title: [ARFC] USDT GSM Facilitator Capacity Increase
author: @karpatkey_TokenLogic + @ACI + @ChaosLabs
created: 2024-7-14

---

Summary

The USDT GSM has reached the Exposure Capacity limit of 4M units. This publication proposes increasing the Exposure Capacity to 6M units.

Motivation

With the GHO Stewards permissions in place, this thread tracks any parameter adjusted by GHO Stewards and provides visibility to the Aave Community.

The USDT GSM has reached its 4M unit Exposure Cap. With GHO’s supply continuing to grow, it is important to scale the GSMs to ensure the peg can be sustained during periods of volatility.

Source: Aave Portal | TokenLogic

This is the first Exposure Capacity increase since the USDT and USDC GSM were deployed on Ethereum.

Specification

The GHO Stewards are to increase the Exposure Capacity by 2M units.

Description	Current	Proposed	Delta
Exposure Capacity	4M	6M	2M

Next Steps

We will closely monitor market behavior and evaluate this decision with every adjustment.

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.

[karpatkey_TokenLogic]

---

Title: [ARFC] GHO Stewards - Adjustments GHO Borrow Cap
Author: @karpatkey_TokenLogic , @ACI @ChaosLabs
Created: 2024-07-19

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Summary

This publication proposes increasing the GHO Borrow Cap.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Cap and grant visibility to the Aave Community.

Specification

The GHO borrow cap is to be increased as follows:

Description	Current	Proposed	Delta
Borrow Cap	95M	100M	5M

Next Steps

The GHO Stewards will revise the GHO Borrow Cap and closely will closely monitor market behaviour and evaluate this decision with every increase.

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.

[karpatkey_TokenLogic]

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Title: [ARFC] GHO Stewards - Adjustments GHO Bucket Capacity on Aave v3 Ethereum
Author: @karpatkey_TokenLogic , @ACI @ChaosLabs
Created: 2024-07-19

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Summary

This publication proposes increasing the GHO Bucket Capacity on Aave v3 Ethereum.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Bucket Capacity and grant visibility to the Aave Community.

Specification

The GHO Bucket Capacity is to be increased as follows:

Description	Current	Proposed	Delta
Aave v3 Bucket	100M	150M	50M

Next Steps

The GHO Stewards will revise the GHO Bucket Capacity on Aave v3 Ethereum to facilitate future Borrow Cap increases beyond the previous 100M Bucket Capacity limit.

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.

[karpatkey_TokenLogic]

---

Title: [ARFC] GHO Stewards - Adjust GHO Borrow Cap Ethereum v3
Author: @karpatkey_TokenLogic , @ACI and @ChaosLabs
Created: 2024-08-22

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Summary

This publication proposes increasing the GHO Borrow Cap.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Cap and grant visibility to the Aave Community.

With 102.2M GHO borrowed of the 105M capacity, this proposal will increase the GHO Borrow Cap by 10% to 116M units of GHO.

Specification

The GHO borrow cap is to be increased as follows:

Description	Current	Proposed	Delta
Borrow Cap	105M	116M	11M

Next Steps

The GHO Stewards will revise the GHO Borrow Cap and closely will closely monitor market behaviour and evaluate this decision with every increase.

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.

[karpatkey_TokenLogic]

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Title: [ARFC] GHO Stewards - Adjust GHO Borrow Rate Ethereum v3
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-08-30

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Summary

This publication proposes decreasing the GHO Borrow Rate on Ethereum from 6.00% to 5.00%.

Motivation

For users without any stkAAVE holdings, GHO is currently more expensive than alternatives on Aave v3 Ethereum.

Source: Aave Analytics | TokenLogic

The weighted average borrow cost of GHO is 5.53%. This is similar to the USDT borrow rate and 25 bps lower than USDC borrow rate. However, this differential between the stablecoins borrow rates is proving insufficient at driving new GHO into supply.

Source: Not yet public

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. The chart below shows the last week of GHO Supply data.

Source: Aave Analytics | TokenLogic

We are observing user(s) acquiring GHO from exchanges and depositing into the stkGHO category of the Safety Module. This is reflected by the relative increase in stkGHO as a fraction of GHO supply and also the GHO price. The chart below shows stkGHO supply increasing over the last week.

Source: Aave Analytics | TokenLogic

Both Chainlink and Redstone oracles are showing GHO trading above peg on Ethereum.

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Source: Aave Analytics | TokenLogic

The Merit program combined with AAVE incentives offers 24.22% APR before applying boost multipliers. With yields across DeFi falling over recent weeks, more users are being attracted to stkGHO.

stkGHO represents 69.18% of GHO supply from a total of 816 addresses.

This publication proposes reducing the GHO borrow rate by 1.00% 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.

In case this ARFC is approved, the stkGHO reward rate should be reviewed.

Specification

The GHO borrow rate is to be revised as follows:

Description	Current	Proposed	Reduction
Borrow Rate	6.00%	5.00%	1.00%

Next Steps

1. 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

[karpatkey_TokenLogic]

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Title: [ARFC] GHO Stewards - Adjust GHO Borrow Cap Ethereum v3
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-09-02

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Summary

This publication proposes increasing the GHO Borrow Cap.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Cap and grant visibility to the Aave Community.

This proposal will increase the GHO Borrow Cap by 7.75% to 125M units of GHO.

Specification

The GHO borrow cap is to be increased as follows:

Description	Current	Proposed	Delta
Borrow Cap	116M	125M	9M

Next Steps

The GHO Stewards will revise the GHO Borrow Cap and closely will closely monitor market behaviour and evaluate this decision with every increase.

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.

[karpatkey_TokenLogic]

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Title: [ARFC] GHO Stewards - Adjust GHO Borrow Cap Ethereum v3
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-09-08

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Summary

This publication proposes increasing the GHO Borrow Cap.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Cap and grant visibility to the Aave Community.

GHO is currently trading above peg with each GSM holding 8M USDC and USDT respectively.

Current liquidity permits a large amount of GHO to be borrowed and swapped to USDC to arbitrage the price to $1.00.

This proposal will increase the GHO Borrow Cap by 12% from 125M to 140M units of GHO.

Specification

The GHO borrow cap is to be increased as follows:

Description	Current	Proposed	Delta
Borrow Cap	125M	140M	15M

Next Steps

The GHO Stewards will revise the GHO Borrow Cap and closely will closely monitor market behaviour and evaluate this decision with every increase.

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.

[karpatkey_TokenLogic]

---

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

1. 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.

[karpatkey_TokenLogic]

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Title: [ARFC] GHO Stewards - Adjust GHO Bucket and Borrow Cap Ethereum v3
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-09-19

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Summary

This publication proposes increasing the GHO Bucket from 150M to 200M and the GHO Borrow Cap from 140M to 150M.

Motivation

With the GHO Stewards permissions in place, this thread is to track adjustments to the GHO Borrow Cap and grant visibility to the Aave Community.

The GHO Bucket Cap is approaching its 150M limit and requires extending. Similar is true for the GHO Borrow Cap which is 132.73M of 140M.

Specification

The GHO Bucket and Borrow Cap are to be updated as follows:

Description	Current	Proposed	Delta
Bucket Cap	150M	200M	50M
Borrow Cap	140M	150M	10M

Next Steps

The GHO Stewards will revise the GHO Borrow Cap and closely will closely monitor market behaviour and evaluate this decision with every increase.

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.

[karpatkey_TokenLogic]

---

Title: [ARFC] GHO Stewards - Adjust GHO Borrow Rate
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-10-08

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Summary

This publication proposes increasing the GHO Borrow Rate by 50bps from 4.25% to 4.75%.

Motivation

Over recent weeks, the GHO Stewards observed the following changes in market conditions:

• GHO as a percentage of DEX liquidity has increase;
• GHO Supply has increased, approaching 160M;
• USDS Liquidity Mining is about to commence; and,
• Spot price has come back to $1.00.

With USDC and USDT borrow rates trending higher since mid September and trading at a premium relative to GHO, this has lead to consist growth in GHO’s circulating supply and helped return GHO to peg.

With GHO trading at peg and the Sky Savings Rate increasing from 6.25% to 6.50%, users will be able to leverage the deposit rate of USDS and GHO borrow rate to generate yield. This is expected to lead to a material amount of GHO being added to DEX liquidity pools. The extent to which users can access this strategy is primarily regulated by adjusting the GHO Facilitator Capacity. Increasing the GHO borrow rate by 50bps reduces the expected rate of return from yield maximising whilst still providing a free-carry opportunity.

The GHO Stewards will continue to monitor market conditions and make further recommendations as to balance both peg stability and growth ambitions.

Specification

The GHO borrow rate is to be revised as follows:

Description	Current	Proposed	Increase
Borrow Rate	4.25%	4.75%	0.50%

Next Steps

1. 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.

[karpatkey_TokenLogic]

---

Title: [ARFC] GHO Stewards - Adjust GHO Borrow Rate
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-11-12

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Summary

This publication proposes increasing the GHO Borrow Rate by 75bps from 4.75% to 5.50%.

Motivation

With USDC and USDT borrow rates trending higher since mid September and GHO trading at peg, the GHO Stewards intend to continue increasing GHO’s Borrow Rate to reflect the borrow rate of similar assets on the Main Market.

The GHO Stewards will continue to monitor market conditions and make further recommendations as to balance both peg stability and growth ambitions.

Specification

The GHO borrow rate is to be revised as follows:

Description	Current	Proposed	Increase
Borrow Rate	4.75%	5.50%	0.75%

Next Steps

1. 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.

[karpatkey_TokenLogic]

---

Title: [ARFC] GHO Stewards - Adjust GHO Borrow Rate
Author: @karpatkey_TokenLogic, @ACI and @ChaosLabs
Created: 2024-11-18

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Summary

This publication proposes increasing the GHO Borrow Rate by 50bps from 5.50% to 6.00%.

Motivation

GHO has been growing consistently since the beginning of October.

The borrow rate for stablecoins continues to increase on the Main Market and the GHO stewards recommend adjusting the borrow rate higher in line with the similar assets borrow costs.

The GHO Stewards will continue to monitor market conditions and make further recommendations as to balance both peg stability and growth ambitions.

Specification

The GHO borrow rate is to be revised as follows:

Description	Current	Proposed	Increase
Borrow Rate	5.50%	6.00%	0.50%

Next Steps

1. 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.