title: [GHO Stewards] October 2026 - GHO Borrow Rate Update
author: @TokenLogic
created: 2026-10-02
Summary
We propose increasing the GHO borrow rate on Aave V3 Ethereum Core from 4.25% to 4.50% APR and the GHO base rate on Ethereum Prime from 2.75% to 3.00%.
The Core rate will match the Aave Savings Rate, while Prime will retain the 25 bps discount to Core at optimal utilization established in August. The GHO Risk Council will execute both changes under the GHO Stewards mandate.
Motivation
Overview
In August, the Core GHO borrow rate increased to 4.25% in two steps, and the Aave Savings Rate was set at 4.50%. A further increase in the Core rate was intended to follow once USDC and USDT borrowing costs reached 4.50%. Both now stand at 4.39%, close to that level, while GHO remains cheaper to borrow at 4.25%.
Borrowers currently pay 4.25% to mint GHO on Core and can earn 4.50% by depositing it into sGHO. The DAO funds this 25 bps difference. At 4.50%, the Core borrow rate would match the savings rate and sit slightly above current USDC and USDT borrowing costs.
Prime
The Prime adjustment follows the same approach agreed in August: the GHO borrow rate at optimal utilization remains 25 bps below Core. With a base rate of 3.00%, Prime’s rate at the kink would rise from 4.00% to 4.25%. At the 86% utilization recorded in this update, borrowers would pay approximately 4.17%, up from 3.92%. The rest of the interest rate curve is unchanged.
Peg and the GHO Stability Modules
GHO traded below $0.999 for most of September and closed 1 October near $0.9993. Over the same period, GSM redemption reserves declined. The USDC GSM is now depleted, while the USDT GSM holds approximately 22.5M USDT.
Some borrowers may repay GHO debt following the rate increase. Those who need to acquire GHO can buy it on the secondary market or mint it through a GSM using USDC or USDT, with no mint fee. Secondary-market purchases would support the peg; minting through the GSMs would replenish their stablecoin reserves. If GHO returns to par, GSM minting should become more attractive relative to market purchases.
We expect continued sGHO deposits through the Aave App to offset part of any decline in borrowed GHO.
Aave Institutional
The [ARFC] Aave Institutional proposal identifies matched sGHO inflows, secondary market liquidity and GSM redemption reserves as funding sources for its GHO route. As we noted in the discussion, current GSM reserves do not cover the full facilitator capacity, and the initial loans will be funded from the DAO balance sheet. As lending grows, the route will need more USDC available through the GSMs. This rate adjustment should help replenish those reserves if borrowers repay using GHO minted through the modules.
Specification
Both rates will increase by 25 bps in a single update per instance, within the GhoAaveSteward per-update limit.
The GHO Risk Council will execute the changes through updateGhoBorrowRate on the Core and Prime GhoAaveSteward contracts. After execution, we will monitor GHO’s peg, GSM reserves, sGHO deposits and GHO debt on both instances.
Disclaimer
TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100086 and the KPI as outlined in this publication. The scope of this engagement is available via this forum proposal.
TokenLogic supports and maintains an independent delegate voting platform within the Aave community.
TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.
Copyright
Copyright and related rights waived via CC0.