A majority of Aave’s decentralized autonomous organization (DAO) voters have approved creating a new stablecoin called GHO, which will be backed by collateral consisting of other cryptocurrencies.

After Aave Companies submitted a governance proposal calling for the creation of the GHO stablecoin, 99.9% of voters approved of the move. To mint GHO, users will first have to deposit cryptocurrencies accepted by Aave.

Aave is a decentralized, non-custodial market protocol allowing users to borrow and lend digital assets. Users who borrow GHO against these assets will earn interest on their collateral used to mint the stablecoin, and interest on loans taken out in GHO will revert to Aave DAO.

Loans meant to mint GHO will have to be over-collateralized, meaning the value of the collateral will have to be superior to the value of the minted GHO. When users repay a loan or are liquidated, the minted GHO will be burned.´

GHO’s value will be pegged to that of the U.S. dollar, and its interest rate will be determined by Aave DAO. The DAO is managed by the Aave community, with AAVE token holders submitting and voting on proposals.