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Aave hikes GHO borrow rates to rescue depleted stablecoin pools

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Aave hikes GHO borrow rates to rescue depleted stablecoin pools

Aave’s Ethereum Core market lists a 4.5% borrowing rate for GHO, aligning the stablecoin’s borrowing cost with the savings rate TokenLogic reported on Oct. 2.

The next test is whether the change brings USDC or USDT into the reserves available to savers who choose to convert withdrawn GHO into USDC or USDT.

Aave describes its savings token (sGHO) as redeemable instantly into GHO, so a holder who wants USDC needs a separate conversion. A higher borrowing rate can change the incentive to repay, but the route used to acquire that repayment GHO determines whether stablecoins enter the reserves.

The DAO service provider reported a depleted USDC GHO Stability Module (GSM) on Oct. 2, and said the rate increase should help replenish reserves if borrowers obtain repayment GHO through the modules.

The effect on reserves depends on borrowers bringing stablecoins into those modules, and the new rate alone does not demonstrate improved USDC conversion liquidity.

Aavescan’s Core GHO data dated Oct. 5 displays a 4.5% borrow APR. Its daily snapshots show 4.25% at midnight UTC on Oct. 3 and 4.5% at midnight on Oct. 4 and Oct. 5, locating the change between daily readings.

TokenLogic’s Oct. 2 notice proposed moving Core from 4.25% to 4.5%. It said borrowers could previously pay 4.25% to acquire GHO on Core and earn 4.5% in sGHO, leaving the DAO to fund the 25-basis-point difference. At an unchanged savings rate, the new Core rate eliminates that stated gap.

5% savings rate reported on Oct. 2.



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