[ARFC] Launch GHO on Sonic & set ACI as Emissions Manager for Rewards

[ACI]

[ARFC] Launch GHO on Sonic & set ACI as Emissions Manager for Rewards

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title: [ARFC] Launch GHO on Sonic
author: @ACI & @TokenLogic
created: 2025-03-05

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Summary

This proposal aims to launch GHO on Sonic & set ACI as Emissions Manager for GHO and aGHO.

Motivation

GHO has gone multichain with its expansion to the Arbitrum and Base networks. As Aave continues its growth across new ecosystems, it presents a strategic opportunity to extend GHO’s reach alongside it. Sonic’s DeFi sector is currently thriving, and with Aave set to launch on Sonic in the coming weeks, deploying GHO there would be a natural next step.

Sonic’s current growth is largely driven by the anticipation of its upcoming airdrop, scheduled for June. Users earn points while protocols accumulate gems based on their activity within the ecosystem.

A key part of the early GHO growth strategy on Sonic will be securing liquidity in an Aave Boosted StableSurge Pool on Beethoven, a friendly fork of Balancer v3. This integration enables idle liquidity to be automatically redeployed into Aave to maximize capital efficiency. Additionally, as part of Aave’s collaboration with Balancer, these pools will receive further support, with Beethoven allocating a portion of their “gems” rewards to incentivize GHO liquidity.

Just as with the Base deployment, a well-coordinated strategy is crucial for GHO’s expansion to Sonic. A successful launch will require close collaboration among service providers to build a strong infrastructure, establish appropriate risk parameters, and solidify GHO’s role as a key stablecoin within Sonic’s DeFi ecosystem.

This ARFC vote seeks community consensus to move forward with GHO’s deployment on Sonic, paving the way for its continued multichain growth and deeper integration across emerging ecosystems.

Specification

The proposed deployment of GHO on Sonic will require coordination across several key components:

Service Provider	Responsibility
Aave Labs + BGD + Certora	Deploy CCIP & Aave Protocol Updates
TokenLogic	Deploy Facilitator, GSM & GHO Steward Updates
Chaos Labs + Risk Llama	GSM, CCIP & Aave Protocol Parameters
ACI + TokenLogic	Incentive Program & Distribution
Aave Liquidity Committee	DEX Liquidity
Gho Stewards	Maintain Risk Parameters

ACI multisig address: 0xac140648435d03f784879cd789130F22Ef588Fcd

The final timeline and technical specifications for each component will be determined by the service providers and outlined in subsequent AIPs, pending approval of this ARFC.

Aave Protocol - GHO Reserve Parameters

Updated proposal 2025-03-15 with Chaos feedback

Parameter	Value
Asset	GHO
Market	Sonic
Isolation Mode	No
Borrowable	Yes
Collateral Enabled	No
Supply Cap	2,500,000
Borrow Cap	2,250,000
Debt Ceiling	-
LTV	-
LT	-
Liquidation Bonus	-
Liquidation Protocol Fee	-
Variable Base	0%
Variable Slope1	6.5%
Variable Slope2	50%
Uoptimal	90%
Reserve Factor	10%
Stable Borrowing	Disabled
Flashloanable	Yes
Siloed Borrowing	No
Borrowable in Isolation	No
E-Mode Category	N/A

Ethereum <> Sonic Facilitator

A facilitator will be deployed on Ethereum specifically to support Sonic.

GHO is considered to have entered circulating supply when users exchange USDC.e for GHO via the stataUSDC.e GSM on Sonic.

The initial configuration for the Sonic GhoDirectMinter facilitator as shown below:

Parameter	Value
Mint Cap	10M Units

This is to be implemented by setting the newFacilitatorBucketCapacity to to 10M.

Reference: GhoDirectMinter

CCIP Configuration

To support the launch of GHO on Sonic, the following parameter adjustments are proposed:

Parameter	Value
Bucket Capacity	+15M Units
Rate Limit Capacity	1,000,000 units
Refill Rate	200 GHO/sec

The Bucket increase is additional to the Bucket Capacity at the time to ensure the GSM can be supplied with GHO.

This is expected to support strong initial growth with the DAO and other expected to be moving large amounts of GHO through the bridge.

Reference: GHO Deployment

GSM Configuration

The below provides the initial configuration of the stataUSDC.e GSM to be deployed on Sonic.

Parameter	Value
GHO Bucket Cap	10.00M
USDC Exposure Cap	5.00M
Freeze Lower Bound	$0.990
Freeze Upper Bound	$1.010
Unfreeze Lower Bound	$0.995
Unfreeze Upper Bound	$1.005
Mint GHO Fee	0.00%
Burn GHO Fee	0.00%

With GHO being minted on Ethereum and being transferred to the GSM, the Mint() function on the Ethereum instance of stataGSM is to be replaced by Transfer() functionality. Pre-minted GHO held by the stataGSM on Sonic is to be transferred when USDC is received.

stataUSDC Revenue

A bot, deployed as part of Dolce Vita will periodically claim the revenue to the DAO’s treasury.

GHO Stewards

GhoAaveSteward

• updateGhoBorrowCap
• • The update changes up to 100% upwards and downwards
  • Only callable by the GHO Steward
• updateGhoBorrowRate
• • The update changes up to 5.0% (configurable by the DAO) upwards or downwards the following four variables:
    • optimalUsageRatio
    • baseVariableBorrowRate
    • variableRateSlope1
    • variableRateSlope2
  • The initially allowed amount of change for these variables is 5%, but is configurable by the DAO
  • Only callable by the GHO Steward
• updateGhoSupplyCap
• • The update changes up to 100% upwards
  • Only callable by the GHO Steward

GhoGsmSteward

• updateGsmExposureCap
• • The update changes up to 100% upwards
  • Only callable by the GHO Steward
• updateGsmBuySellFees
• • The update changes up to 0.5% upwards or downwards (in both buy and sell individually)
  • Asumes that strategy is FixedFeeStrategy created by FixedFeeStrategyFactory
  • Only callable by the GHO Steward

Budget

Create an Allowance for GHO on Ethereum for a total of 1,000,000 GHO from Prime instance to support the initial growth of GHO on Sonic.

ALC Ethereum SAFE: 0xA1c93D2687f7014Aaf588c764E3Ce80aF016229b

Acquire GHO and deposit into Prime instance:

Ethereum
aEthUSDT (1.00M)

Disclosure

The ACI & TokenLogic does not receive any payment for this proposal.

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, escalate this proposal to the AIP stage.

Copyright

Copyright and related rights waived via CC0.

[LlamaRisk]

Summary

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, and Sonic is considered a suitable candidate.

We support the proposed GHO risk parameters, including CCIP and GhoDirectMinter configurations. Launching stataUSDC.e GSM is also a welcomed and rational decision to help GHO sustain stability. It is notable that GSMs will now provide an alternative way for users to enter Aave’s GHO ecosystem since GSMs transition to zero fee setup and are prepared to support the sGHO roll-out.

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.

Source: TokenLogic GHO Analytics, March 10th, 2025

Liquidity

Over the past 90 days, GHO’s liquidity has grown significantly. Currently, the total liquidity TVL stands at $95.5M with 44.6M GHO available in the liquidity pools paired with other stablecoins, mainly USDC, USDT, and USR. The largest pools are deployed on Balancer and Curve.

Source: TokenLogic GHO Analytics, March 10th, 2025

Improved liquidity levels have resulted in 18M GHO being available to be sold within a 1% price impact on Ethereum Mainnet. This is a significant improvement over the last 90 days and indicates a large stability buffer regenerated after the temporary secondary market de-peg that happened in November 2024.

Borrowing Trends

GHO borrowing remains healthy, with a current collateral ratio of 2.08 in the face of stressful broader market conditions. The main collateral type for GHO borrows is now WBTC (18.9%), with the WETH proportion (15.3%) falling slightly lower.

Source: TokenLogic GHO Analytics, March 10th, 2025

GHO’s borrow rate on Aave Core has now been lowered to 4.5-6.45%, which aligns with the current borrow rates of other stablecoins on Aave’s markets. Similar GHO borrow rates are also observed on Aave’s Prime and Base markets. Nonetheless, Arbitrum GHO’s borrow rate has remained elevated, currently at 8.7%.

Source: TokenLogic GHO Analytics, March 10th, 2025

Network-Specific Considerations

Sonic is experiencing rapid DeFi sector growth, driven by the anticipation of an upcoming airdrop. Users earn points while protocols accumulate gems based on activity. The current chain TVL is at $690m, with Aave being one of the largest protocols shortly after its Sonic chain debut. This rapidly growing market can be considered for GHO introduction. Deploying GHO would also enable potential GHO integrations into Sonic’s yield venues.

Liquidity Venues

Currently, Beets protocol is the largest DEX on the Sonic chain with a TVL of ~$82m. Other DEXs, such as Shadow, Wagmi, Silverswap, and Equalizer, are also available. The high DEX availability is also motivated by the point program incentives. Particularly, this results in large volumes generated by Shadow concentrated liquidity pools.

Source: Dune Analytics, March 10th, 2025

A key part of early GHO growth on Sonic will be securing initial liquidity that would later become a supportive factor for further GHO supply and borrow cap increases.

Stablecoin Yield Venues

There is a vast availability for stablecoin yield opportunities on the Sonic chain, accounting for more than $98M of TVL (excluding Aave) in venues such as Silo V2, Beets, Pendle, Spectra V2, and Beefy. GHO deployment on this chain could also enable new GHO yield opportunities in some of these venues, consequently increasing utility for GHO borrowing on Aave’s Sonic market.

Source: DefiLlama, March 10th, 2025

Aave’s Market

Since Aave’s deployment on Sonic, the market has grown rapidly to $130.7M, with only 3 initial assets: USDC.e, S, and WETH. The further growth potential is yet to be explored as Risk Stewards continue to increase the supply caps. Introducing GHO to this market would diversify the market’s asset distribution and enable the potential for GHO to become one of the main stablecoins early on.

Facilitators

Unlike Mainnet, GHO would not be minted on-demand in the Aave Sonic market; it must be directly supplied to the lending pool. GHO is first minted on Mainnet and then bridged to Sonic using the CCIP Bridge Facilitator. The initial configuration for the Sonic GhoDirectMinter facilitator will 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.

stataGSM

Deploying GSM modules and new chain deployments is a robust and welcomed stability measure. stataUSDC.e choice is motivated by the vast availability of USDC.e reserves on Aave’s Sonic market. 80M USDC.e has been supplied to this market, with the total USDC.e supply on Sonic reaching 204M. Therefore, an initial limit of 5M USDC.e in the GSM is rational, with maximal potential supply yield dilution being insignificant. However, if the USDC.e availability on Aave’s Sonic market diminishes, downward adjustments to stataGSM’s exposure cap would be advised.

Recommended Parameters

The full parameter specification has already been provided by @ACI. LlamaRisk is in full accordance with these parameters and will continue monitoring the Sonic market after the deployment of GHO.

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.

[ChaosLabs]

Overview

Chaos Labs has assessed the proposal to deploy GHO on the Sonic blockchain and set ACI as the Emissions Manager for GHO, and aGHO supports the proposed changes. Our analysis considers GHO’s current multi-chain strategy with successful deployments on Arbitrum and Base, along with the proposed risk parameters and infrastructure for Sonic integration.

Risk Assessment

The proposed deployment of GHO on Sonic represents a logical continuation of Aave’s cross-chain expansion strategy. Based on our analysis of GHO’s performance on Ethereum mainnet, Arbitrum, and Base, expanding to emerging ecosystems like Sonic presents both opportunities and challenges that require careful risk management.

The current proposal aligns with the cross-chain architecture previously implemented for GHO, utilizing Chainlink CCIP as the secure interoperability layer. This consistency in architecture reduces technical risks associated with new deployments, as the framework has been rigorously tested and successfully implemented on Arbitrum and Base networks.

GHO’s performance on previously expanded networks demonstrates the effectiveness of a carefully coordinated, multi-stakeholder approach to new deployments. On Arbitrum, for instance, GHO has benefited from the network’s established ecosystem and user base while offering lower transaction costs and enhanced accessibility compared to Ethereum mainnet. Similarly, the Base expansion has further validated GHO’s cross-chain strategy and technical implementation.

Parameter Recommendations

The proposed parameters for GHO on Sonic align with Chaos Labs’ risk assessment methodology. Specifically, the conservative initial settings for borrowing and supply caps (2.5M supply cap and 2.25M borrow cap) appropriately limit exposure during the early adoption phase while allowing for sufficient liquidity. These caps can be adjusted by GHO Stewards as adoption increases, providing necessary flexibility while maintaining risk controls.

We recommend an IR curve, instead with a 6.5% slope1, aligned its Borrow Rate at UOptimal on the Prime Instance. The 10% reserve factor also appropriately balances protocol revenue generation with supplier incentives.

For the CCIP configuration, the bucket capacity increase of 15M units, rate limit capacity of 1M units, and refill rate of 200 GHO/sec provide sufficient cross-chain liquidity while implementing appropriate rate limiting to mitigate potential bridge exploitation risks.

GSM Implementation Analysis

The stataUSDC.e GSM implementation is particularly important for maintaining GHO’s stability across networks. The proposed freeze and unfreeze bounds (0.990-1.010 and 0.995-1.005, respectively) align with established risk parameters used in previous deployments. Setting both mint and burn fees to 0% initially is appropriate to encourage adoption, though Chaos Labs recommends closely monitoring utilization and considering fee adjustments as the market matures.

The GHO Bucket Cap of 10M and USDC Exposure Cap of 5M establish appropriate initial constraints that balance growth potential with risk management. As utilization patterns emerge, these parameters should be reviewed regularly by the GHO Stewards.

Steward Authority Framework

The governance structure, with GHO Stewards having parameter adjustment authority within defined bounds, provides an effective balance between operational flexibility and risk containment. The ability to update borrow caps, interest rates, supply caps, and GSM parameters within specified limits enables timely responses to changing market conditions while maintaining appropriate governance oversight.

Based on our observations of previous GHO deployments on Arbitrum and Base, this governance model has proven effective in maintaining stability during the initial launch phase and supporting subsequent growth.

Liquidity Strategy Considerations

The proposal’s emphasis on a coordinated liquidity strategy involving Beethoven (Balancer v3 fork) and the Aave Boosted StableSurge Pool is well-aligned with successful approaches used in previous GHO deployments. Automatic redeployment of idle liquidity into Aave maximizes capital efficiency while maintaining sufficient market depth.

The allocation of 1M GHO from the Prime instance to support initial growth on Sonic is appropriate given the early-stage nature of the deployment. This approach mirrors successful liquidity bootstrapping strategies previously implemented for Arbitrum and Base expansions.

Recommendation

Based on our assessment, Chaos Labs supports the proposal to deploy GHO on Sonic with the specified parameters and governance structure. However, we propose a lower Slope1 parameter.

Parameter	Proposed	Recommended
Slope1	9.5%	6.5%

Disclaimer

Chaos Labs has not been compensated by any third party for publishing this recommendation.

Copyright

Copyright and related rights waived via CC0

[SaucyBlock]

@ACI

Acquire GHO and deposit into Prime instance:

Why deposit into Prime Instance instead of Sonic Instance?