GHO Development Update

Summary

Today, the Aave Companies are providing a progress update on the development of GHO since its initial introduction to the community. This update will include details on the first GHO audit conducted by Open Zeppelin and the GHO technical paper, which is now available for community review.

Development Updates

Aave V3 Mainnet Upgrade

Originally, the community decided through a temperature check on Snapshot that GHO’s first Facilitator would be the Aave V2 Market on Ethereum; however, in a recent snapshot, the Aave DAO voted in favour of deploying a new Aave V3 Market* on Ethereum. The Aave V3 Market on Ethereum is well-positioned to serve as the initial Facilitator for GHO thanks to key risk-reducing features including e-mode, isolation mode, and supply caps.

We invite the community to discuss the proposed approach of the Aave V3 Market on Ethereum serving as the initial Facilitator for GHO.

First Audit

Pursuant to the DAO’s Snapshot for Aave V2 deployment, Open Zeppelin has completed the first audit of GHO (on the source code for deployment on the Aave V2 Market on Ethereum) and did not report any major findings. Please find the Open Zeppelin audit report of the GHO Aave V2 Market source code here.

If the community provides feedback on a different deployment of the Aave Protocol being the initial Facilitator for GHO, an additional audit will take place on the GHO Aave V3 Market code base.

We will continue to work with auditors to ensure that the contracts are thoroughly tested and secure before release.

Facilitator Process

A Facilitator (e.g., a protocol or entity) can trustlessly mint and burn GHO tokens. Various Facilitators will be able to apply different strategies to their generation of GHO. At launch, there will be one Facilitator for GHO; however, a framework with guidance on how to apply to become a Facilitator will be published on the Aave Governance forum.

Technical Paper

The GHO technical paper outlines the smart contract design of GHO. It contains an overview of the fundamental equation for GHO including supply and borrow mechanics, liquidation and repayment, the role of Facilitators, the discount model, interest accrual, stability mechanics, and information on the price oracle. We invite the community to review the paper and respond with any questions.

GHO_technical_paper.pdf (908.9 KB)

Testnet deployment

With the GHO technical paper, first audit, and access points under development, the Aave Companies are now ready to experiment with the first Testnet deployment. The Testnet deployment will be made within the coming weeks, so stay tuned for an announcement on the date and time!

Conclusion

Aave’s goal has always been to provide the best possible experience for users while opening the world of DeFi to everyone. We believe that GHO has the potential to be a game-changer for the industry and we are committed to making it the best possible solution for Aave users. Thanks for supporting us on this journey!

We look forward to hearing community feedback on the GHO technical paper and development progress.

LFGHO!

*No deployment date has yet been provided; however, the new market is expected to be deployed in the coming weeks.

29 Likes

Hello aave team and community! I have a few questions, it’s for a GHO research.

  1. Would you support MAI (Qi Dao) if it is proposed as a facilitator? (I invite the rest of the community to comment on this)
  2. Since MAI already has e-mode enabled, could it be part of the “PSM” that Stani mentioned in the introduction ARC? (if aave polygon market becomes a facilitator)
  3. Are you planning to propose liquidity incentives in any pool for GHO?
  4. Contemplating the concerns of the community observed around the idea of ​​the DAO running monetary policy (GHO interest rate). Do you envision any alternative to this?
  5. Will there be any AMAs about GHO in the short term?
  6. Do you imagine any GRANT related to GHO?

I’ll be very grateful for your collab.

3 Likes

Thanks for your questions MinistroDollar.

  1. Supporting MAI as a Facilitator is entirely up to the community. To become a Facilitator for GHO, the community needs to vote and approve the new Facilitator. As mentioned, a framework will be provided in the future.
  2. If the community decides for Polygon V3 market to become a facilitator, then using e-mode supported assets you could mint GHO up to a 97% collateral ratio.
  3. Liquidity incentives are entirely up to the community, and we invite the community to discuss the potential of liquidity incentives.
  4. Initially, the parameters regarding GHO will be set by Aave Governance. The community is welcome to discuss alternatives to the proposed governance process.
  5. Yes, watch out for a Twitter space soon.
  6. GHO is still part of the Aave DAO and therefore is eligible for grants via the Aave Grants DAO.
4 Likes

Wouldn’t it be easier to just give discount eligible users a few extra GHO than to adjust their interest rate?

Hi @AaveCompanies,

Would it be possible for the community to learn if @AaveCompanies plans to seek retrospective payment for developing GHO ? And if so, can guidance be provided ?

This information is needed on the forum, as the DAO’s runway analysis is based solely on publicly available information. It is common for companies to provide cost and schedule guidance for material projects under development.

Engineering projects typically have a decision gate (Final Investment Decision) where cost, lead time, economic impact and challenges are all required inputs. Thereafter, cost and schedule updates should feature in market updates. Delays in GHO would affect the forward guidance, if the DAO was issued such guidance.

Sharing the additional cost of pivoting from v2 to a v3 deployment had the potential to influence if the ethereum v2 market was to be upgraded or not. The additional cost and any delay should have been disclosed in my honest opinion, especially if this is an expense the DAO will be asked to reimburse.

More generally, I think Aave Companies should publish a proposal like Gauntlet and Llama detailing a scope of work, timeline and KPIs. This will standardise relationships with the DAO, provide much needed transparency and give the community some kind of forward guidance / roadmap to look forward to. At the moment it appears adhoc and costs are emerging well after they are incurred.

2 Likes

Hi @MatthewGraham, Thank you for your comment. We welcome community feedback on how we can improve our communications with the DAO and share information that is helpful to the DAO.

Throughout the process of making the V3 Retroactive Funding proposal, we learned a lot about how to improve our communications about this model. Our aim is to be transparent in all our proposals and to provide information, metrics, and guidance that helps the DAO make informed decisions. Our interests are aligned with those of the DAO.

Based on what we learned, we are working internally to define the most appropriate way to fund significant protocol developments and specifically, how to fund GHO development. We believe that the retroactive funding model works well only for development that returns measurable value to the DAO. Not all development projects warrant retroactive funding and are suited to the model.

We will keep the DAO updated on projects that we think fit the model. The DAO treasury management requires this information, and it is essential for accountability. .

Regarding your proposal that Aave Companies submits a proposal like Gauntlet or Llama’s, we will take this recommendation seriously. We have been working on a solution and will share more about our decentralized approach in a future communication. When we bring our thoughts to the forum, we look forward to further discussions.

Thank you again for bringing this issue to us. We will always do what is best for the community.

2 Likes