title: [TEMP CHECK] Deploy GHO Facilitator
author: @karpatkey_TokenLogic
created: 2024-10-29
Summary
This publication proposes creating a Facilitator entity on Ethereum to support GHO’s expansion across several decentralised applications on various networks.
This proposal also includes the first integration, a 5M GHO deposit into Aave v3 on Arbitrum. Future proposals shall outline how and where GHO shall be deployed.
Motivation
GHO was successfully launched on Arbitrum July 2nd 2024 with only the CCIP Bridge Facilitator on Arbitrum. Since then, growth has stalled with around 3% of GHO’s supply located on Arbitrum.
This publication proposes creating a new Facilitator entity on Ethereum for the purpose of onboarding newly minted GHO to various applications on Ethereum, Arbitrum, Base, Avalanche and other networks as GHO expands.
Using Aave v3 on Arbitrum as an example, the below provides a high level overview of the flow:
- GHO is Minted on Ethereum;
- Transferred to Arbitrum via the CCIP bridge; and,
- GHO is deposited into Aave v3 on Arbitrum.
The facilitator will enable Aave DAO to onboard new GHO demand vectors while segregating risk from the existing Ethereum facilitator.
The new facilitator role will have independent minting and bucket capacity constraints specific to supporting each proposed integration.
Collateralization of minted GHO will depend on the different use-cases and takes place on the respective dApp when users bring GHO into the circulating supply.
Beyond an initial 5M of GHO being proposed for deployment into Aave v3 on Arbitrum, other destination(s) for newly Minted GHO are to be presented in separate [TEMP CHECK] proposals for Aave DAO approval. An example, a [TEMP CHECK] would be to Mint GHO to be deposited into a GHO Reserve on Aave v3 Lido instance.
Aave v3 Arbitrum
An initial 5M units of GHO be deposited into the existing GHO Reserve on Aave v3 on Arbitrum. The below image shows the overall flow of GHO from Eth to Arb and into Aave v3.
Depositing 5M of GHO represents a ~22% of the GHO liquidity in the reserve and is expected to dilute the deposit rate and reduce the borrow rate.
Users will then respond and a new equilibrium is found. After monitoring how the market reacts to this change, a separate proposal will detail any additional GHO to be minted and deposited into the reserve.
To ensure there is sufficient capacity in the GHO reserve, the Risk Stewards will increase the GHO Supply Cap as required to facilitate GHO being deposited.
The Aave DAO is to be the sole beneficiary of any revenue generated from GHO deposited into Aave.
A separate proposal shall be required to deposit additional GHO into the reserve at a later date.
Specification
The below serves as a guide and is to be refined with input from Risk Service Providers during the ARFC stage of the governance process.
| Parameter | Value |
|---|---|
| Bucket Cap | 50M units |
| Mint Cap | 5M Units |
The GHO Stewards are to be responsible for determining when and how much to increase the GHO Mint Capacity and Bucket Capacity whilst using the fast track, Direct-to-AIP, process for implementing the proposed amendments.
The facilitator on Ethereum can generate and burn GHO tokens up to a certain bucket size.
Disclosure
TokenLogic and karpatkey receive no payment for this proposal.
Next Steps
- Gather feedback from the community.
- If consensus is reached on this [TEMP CHECK], escalate this proposal to the Snapshot stage.
- If Snapshot outcome is YAE, escalate this proposal to the ARFC stage.
Copyright
Copyright and related rights waived via CC0.