Summary
LlamaRisk supports the deployment of GHO on Gnosis Chain. As GHO continues scaling after successful deployments on L2s, it is rational to expand the GHO availability further. Our analysis indicates that GHO is ready for further cross-chain deployments, with Sonic and Gnosis considered suitable candidates. Introducing GHO would also continue the Gnosis market enhancements, where GHO and USDC.e expected to become the primary stablecoins of the market.
Notably, GSMs will now provide an alternative way for users to enter Aave’s GHO ecosystem because of the zero-fee setup. This way, GSMs will support GHO stability and contribute to the sGHO roll-out. Nonetheless, due to the small USDC.e supply on Aave’s Gnosis market, introducing a (stata)USDC.e GSM could undermine the borrow rate stability. Nonetheless, after the Gnosis market enhancements are finalized, the deployment of a GSM could be re-considered.
Current GHO Scale
Arbitrum and Base were selected as the first blockchains for GHO expansion beyond Ethereum, with GHO already operational on these networks. The stablecoin’s total supply is now fluctuating around 200M after a period of a temporary supply slump back in January 2025. Shortly after sGHO is adopted, an additional boost in growth is anticipated.
A week before this proposal, we publicly covered the current GHO state, highlighting that:
- GHO’s total liquidity TVL is $95.5M, with 44.6M GHO in pools, mainly paired with USDC, USDT, and USR.
- 18M GHO can now be sold with only a 1% price impact, a strong recovery from the November 2024 de-peg.
- GHO borrowing remains healthy with a 2.08 collateral ratio. WBTC (18.9%) is now the top collateral, surpassing WETH (15.3%).
At the time of writing, the situation remains unchanged, except for the GHO borrow rate on Core being lowered to an interval of 3.77%-5.39% as broader market rates continue to decrease.
Network-Specific Considerations
Gnosis has established itself as a chain focused on RWA and payment solutions. The native asset of this chain is GNO, which does not serve as a gas token but is used for staking on the Gnosis Beacon Chain and acts as the governance token for the GnosisDAO. The current chain TVL is at $270M, with Aave representing 1/4th of that value. This mature market can be considered for GHO introduction. Upcoming incentive programs would help bootstrap GHO’s supply in this chain. Deploying GHO would also enable potential token integrations into Gnosis yield venues.
Source: DefiLlama, March 15th, 2025
Liquidity Venues
Balancer DEX is the major venue on the Gnosis chain with a TVL of ~$74.5M. Other DEXs, such as Uniswap V3, Curve, Sushiswap, and Honeyswap, are also available but represent relatively minimal liquidity size. The dominance of Balancer results in 98.8% of trading activity happening in this DEX.
Source: Dune Analytics, March 15th, 2025
A key part of early GHO growth on Gnosis will be securing initial liquidity that would later become a supportive factor for further GHO supply and borrow cap increases. Incentive programs would contribute significantly to this goal, although sustainability depends on future GHO use cases on the Gnosis chain.
Yield Venues
Gnosis chain is notable for the availability of RWA venues. A significant RWA protocol is RealT, which offers tokenized real estate products. Moreover, Backed Finance offers tokenized securities and derivatives. Apart from Aave, Spark lending protocol has a moderate presence on Gnosis. This chain also hosts a significant payment platform, GnosisPay, which offers direct payments from an on-chain savings account with up to 5% cashback in GNO tokens.
Source: DefiLlama, March 15th, 2025
Due to the RWA presence and availability of EURe, GBPe, and Forex, trades on this chain are significant and currently represent 23.2% of the trading volume.
Source: Dune Analytics, March 15th, 2025
Aave’s Market
At the time of writing, $62.6M of assets are supplied to Aave’s Gnosis market. The largest assets by supply are sDAI, wstETH, and GNO. USDC.e and xDAI are currently the largest dollar-denominated stablecoins, with Monerium EURe also having an established position with $9.7M of supply.
Source: Aave Gnosis, March 15th, 2025
The most popular strategies in this market are sDAI yield-looping using USDC.e or EURe as collateral and wstETH yield leveraging. After the market enhancements that will take effect shortly, the sDAI yield leveraging the use case is expected to expand further. Backed’s bCSPX tokenized S&P 500 ETF will also enable a novel use case unseen for Aave’s markets. Concerning the stablecoins, the long-term goals of reworking the Gnosis market are:
- USDC is to be phased out and off-boarded gradually;
- xDAI is to be discontinued and off-boarded gradually;
- USDC.e and GHO are to become the primary stablecoins of the market.
Facilitators
Unlike Mainnet, GHO would not be minted on-demand in the Aave Gnosis market; it must be directly supplied to the lending pool. GHO is to be first minted on Mainnet and then bridged to Gnosis using the CCIP Bridge Facilitator. The initial configuration for the Gnosis GhoDirectMinter facilitator is recommended to have a mint cap of 10M GHO.
Price Feed
GHO oracles on all markets use a fixed 1:1 price ratio, and Sonic will follow this standard.
GSM
Deploying GSM modules and new chain deployments is a robust and welcomed stability measure. Nonetheless, low current USDC.e supply availability (both absolute and on Aave’s Gnosis market) is susceptible to larger borrow and supply rate fluctuations if a (stata)USDC.e GSM would be deployed. Due to the lack of other asset candidates, abstaining from a GSM creation is recommended until the market develops further.
Source: DefiLlama, March 15th, 2025
Recommended Parameters
Ethereum ↔ Gnosis GHO Facilitator
A facilitator will be deployed on Ethereum specifically to support Gnosis. While @kpk did not specify the exact parameters, we recommend a classical initial configuration for the Gnosis GhoDirectMinter facilitator:
| Parameter | Value |
|---|---|
| Mint Cap | 10M Units |
CCIP Configuration
Similarly to the Facilitator parameters, a notable increase in the Bridge Facilitator is recommended:
| Parameter | Value |
|---|---|
| Bucket Capacity | +15M Units |
| Rate Limit Capacity | 1,000,000 units |
| Refill Rate | 200 GHO/sec |
GHO Stewards
As with every GHO deployment, GHO Stewards are recommended to be deployed. Stewards would have the same parameter change capabilities as on other chains.
GHO Market Parameters
The full parameter specification has already been provided by @kpk. LlamaRisk supports these parameters but recommends setting more moderate Base and Slope parameters to better align with current broader market rates:
| Parameter | Value |
|---|---|
| Variable Base | 0% |
| Variable Slope1 | 6.5% |
| Variable Slope2 | 50% |
Useful Links
- TokenLogic GHO Analytics Dashboard
- Aave Dashboard
- Dune: Gnosis Analytics
- Gnosis scan: Block Explorer
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.