Summary
LlamaRisk supports launching GHO on X Layer concurrently with the initial Aave deployment. The strategy and parameters proposed by TokenLogic align with the measured approach taken for previous GHO expansion initiatives, allowing GHO to scale responsibly in response to demand.
The planned liquidity incentives, bootstrapped by the 2M aEthLidoGHO budget, will be crucial for establishing deep liquidity and sustaining the secondary market peg for GHO on X Layer. Furthermore, the implementation of a RemoteGSM will provide a robust stability buffer from inception, supporting GHO’s gradual deployment on the network.
The Cross-Chain Progress
Since GHO’s cross-chain deployments began, GHO has grown to 296M circulating supply, with ~34M GHO residing on the supported L2s. The Avalanche market has continued to expand over the past month, while the Base market has continued to contract. All other markets remained stable.
Source: TokenLogic GHO Dashboard, October 2, 2025
Source: TokenLogic GHO Dashboard, October 2, 2025
Current Health of GHO
GHO’s secondary market peg saw a temporary discount of up to 30 bps in late July. Adjustments to the GHO borrow rate and the Aave Savings Rate were effective in containing outflows and reducing market pressure. GHO has since returned to trading within 10 bps (0.1%) of its peg.
Source: TokenLogic GHO Dashboard, October 2, 2025
On Ethereum, GHO currently possesses a 35M sell buffer within 10 bps (0.1%) price impact, suggesting that a selling pressure of more than 10% of the supply would be needed to materially destabilize the peg.
Potential on X Layer
Currently, GHO maintains a healthy collateral ratio of 3.6, backed predominantly by high-quality liquid assets like WETH, ETH LSTs, and wrapped BTC. With the Aave X Layer market being deployed, the GHO risk profile would change insignificantly, as the same asset types would be onboarded to that market.
Source: TokenLogic GHO Dashboard, October 2, 2025
The proactive GHO DEX integrations and incentive programs will further accelerate GHO’s adoption within X Layer’s ecosystem, improving its utility across various yield venues. Due to the fairly low current adoption of stablecoins on X Layer, GHO also has an opportunity to capture a large part of the stablecoin share on X Layer.
Parameter Recommendations
We support the parameter recommendations put forth by TokenLogic. The 50M Facilitator Cap is sufficient to support anticipated inflows, and a 20M initial mint is a conservative approach given the current GHO peg stability. During the AIP stage, the initial mint amount could be adjusted based on the peg’s stability at that time.
Regarding the GSM parameters, we observe the introduction of a non-zero GHO burn fee. This is intended to create a GHO stability buffer within a 15 bps peg range, making GHO burns profitable if GHO depegs by more than 15 bps. While we support this mechanism, we note that other GSM deployments, such as the GHO deployment on Plasma, have proposed a 0 fee setup. For consistency, we would appreciate unifying these parameters at the time of deployment. The risk implications and further details regarding the 0 fee setup were discussed in a separate thread earlier this year.
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.