Service Provider: @kpk (formerly karpatkey)
Duration: 01/01/2025 to 31/03/2025 (Half 1)
Summary
This report summarises the contributions of kpk (formerly karpatkey) during the first quarter of 2025, and the first half of our engagement as GHO Growth Service Provider for Aave DAO.
This quarter marked significant progress against our six-month mandate. Our work has focused on expanding GHO’s presence, utility and adoption, and advancing the design of sGHO—a yield-bearing vault that introduces a novel savings mechanism for GHO holders.
Key milestones this quarter include:
- Finalising the deployment path for GHO on Gnosis Chain, culminating in the approval on the GHO Launch ARFC at the end of March; and
- Designing the technical framework for sGHO.
This report provides a basic recap of our mandate, together with a selection of action items for our next steps during the second half of our mandate.
Mandate
In our original discussion of this mandate in the DAO forum, we set out the motivations for this work stream. The stablecoin landscape is developing rapidly, and accelerating GHO adoption poses a unique opportunity for Aave to solidify its foothold. Through tailored strategies for specific ecosystems, we proposed to drive proactive growth and expansions of GHO through new deployments and integrations, beginning with Gnosis Chain.
More specifically, our specification for the first phase of work as GHO Growth Service Provider comprised of several core developments:
- Deploying GHO on Gnosis Chain, leveraging its DeFi ecosystem;
- Developing and deploying a GHO vault (sGHO), to offer risk-minimised yield from the Aave Merit program across chains, and improve the localised utility of GHO; and
- Establishing incentives and infrastructure, to bootstrap GHO liquidity, adoption and usage across different ecosystems, starting with a new Aave DAO treasury on Gnosis Chain.
GHO Deployment on Gnosis Chain
In collaboration with other key Aave service providers, we proposed and aligned on the full technical stack and risk parameters required to launch GHO on Gnosis Chain. An ARFC for the GHO deployment has now been passed with the following parameters:
2.5M (USD) supply cap;
- 2.25M (USD) borrow cap;
- 0% reserve factor;
- Launching as a borrowable asset but without collateralisation enabled. No isolation mode required;
- Flashloans enabled, but siloed and isolated borrowing disabled;
- A dedicated facilitator on Ethereum to support cross-chain GHO minting with a 10M unit cap;
- Chainlink Cross-chain Interoperability Protocol bridge to be integrated with a 15M unit bucket capacity, a 1M unit rate limit and a 200 GHO/sec refill rate; and
- ACI has been designated as the Emissions Manager, with a tailored incentive plan (currently in development).
This deployment lays the groundwork for the upcoming launch of sGHO, which will be live on Gnosis Chain as one of its first chains, as well as the remaining action items of our mandate.
sGHO Vault Design
One of the most impactful initiatives this quarter has been developing, debating and finalising the technical architecture and governance strategy behind sGHO.
Though the deployment of sGHO is contingent on the deployment of GHO (and therefore the above initiative for Gnosis Chain), a significant amount of work has been required upfront to define the specification of the product and develop the appropriate implementations.
The highlights of our proposed architecture include:
- ERC-4626 Vault: sGHO would be an auto-compounding vault accepting GHO and returning sGHO, a token that accrues value over time. ERC-4626 facilitates common interoperability between protocols, making for easy deployment and integration of sGHO into various protocols and applications;
- Atomic Convertibility: Instant deposits and withdrawals among the vault’s existing assets, without any need for cooldowns, fees or slashing; and
- YieldMaestro Contract: A dedicated smart contract mechanism that will boost the base yield of the vault by aggregating and dynamically distributing external rewards to depositors in a controlled, predictable manner.
Benefits for Aave and GHO
We believe the proposed approach will deliver a range of benefits to GHO users and the Aave DAO:
- Liquidity Growth: sGHO’s predictable yields will attract idle capital and potential liquidity providers to grow liquidity and adoption;
- Expanded Utility: sGHO’s standardised design allows for seamless integrations with external protocols to maximise the scope of potential use cases open to users;
- Crosschain Consistency: Harmonising rates across different chains will help to avoid fragmentation, support consistent user experience and enable crosschain interoperability for sGHO; and
- User Acquisition: Risk-averse and passive users gain a secure, DeFi-native savings vehicle with predictable returns.
Our initial proposal outlines the full general specification for sGHO. As sGHO is rolled out across chains, we will outline chain-specific Aave Savings Rate configurations in upcoming governance proposals.
Next Steps
In view of the significant progress against our mandate across the first quarter, we are excited to progress with the remaining items over the next three months:
- Launch GHO on Gnosis Chain following an upcoming AIP with initial ASR configuration and YieldMaestro activation;
- Finalise and audit the proposed sGHO smart contract system;
3.Roll out liquidity incentives, DeFi integrations and other partnerships to support GHO and sGHO adoption on Gnosis Chain; and - Prepare to expand GHO and sGHO to other chains following successful Gnosis Chain deployments.
Conclusion
The first quarter of 2025 has seen material steps forward in establishing the foundations for the long-term growth of GHO. Having broadly achieved the technical design of sGHO, DAO alignment around the deployment plans and parameters, and set the groundwork to implement the deployment, we are broadly on track to achieve our objectives by the end of the current mandate.
With the upcoming launch of sGHO, Aave DAO is poised to unlock a new phase of adoption—anchored in yield-bearing utility, multi-chain reach, and protocol-native savings mechanisms. Though our mandate has emphasised the deployment on Gnosis Chain, this work is only the beginning of a long-term strategy to see GHO become a central player in our rapidly-growing stablecoin landscape.
We at kpk are excited to continue with our plans under this mandate, and to keep delivering value for the Aave ecosystem in the quarters ahead. We thank you for your ongoing trust and support as we work to translate vision into reality.
Copyright
Copyright and related rights waived via CC0.