Aave proposes an integration of a multi-collateral stablecoin - here's what you need to know.

Building a decentralized platform to handle sustainable yield generation is one thing along the line, but making sure the contract encompasses all functionality is another. What we're to expect with the revolution of Defi is that many structures will be built on similar frameworks.

Looking at the space from a banking point of view, we have numerous types of banks in the world today, all of which perform basically the same function, it doesn't make much difference along the line as it's all built with the common goal of deploying sustainable income structures on a decentralized platform.

That said, Aave is one next on the list to take interest in deploying a protocol-owned and backed stablecoin called GHO.

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GHO is Aave's proposed native decentralized collateral-backed stablecoin. The protocol, if the proposal gets voted in, will allow users to supply collateral assets to mint GHO while still earning interest on the underlying asset, whereas all conditions pertaining to the stablecoin will be handled by the DAO.

The DAO is bound to benefit 100% from this as all interest payment on borrowed GHO is directed to it. This creates a more competitive atmosphere as stablecoin borrowing on the Aave protocol generates revenue in its operationality.

The stablecoin market, having embraced great success with over $150 billion in capitalization, has proven to be a vital piece of the crypto economy. Stablecoins in their basic design provide a spectrum of benefits including the borderless transfer of value across various crypto networks.

As it is built to maintain a stable value, stablecoins have become the heart of the crypto space as it provides an edge to volatility while following a set design to maintain a value of $1. Yield-generating protocols know this to be an important aspect of Defi, and as such, build most of its structures around it.

^{GHO introduces the concept of Facilitators. A facilitator (e.g., a protocol, an entity, etc.) has the ability to trustlessly generate (and burn) GHO tokens. If this proposal is approved, then any facilitator would have to be approved by Aave Governance. Various facilitators will be able to apply different strategies to their generation of GHO.}

^{For each Facilitator, Governance will also have to approve something that we call a bucket. A bucket represents the upward limit of GHO a specific facilitator can generate.}

^{If enacted, this proposal will activate the first facilitator: the Aave Protocol - specifically the AAVE market on Ethereum. Governance will be able to determine and assign this facilitator a specific bucket capacity to bootstrap the GHO liquidity and the GHO market.}

So in a nutshell, all things GHO is powered by the DAO, which can be powerful, giving a shared scaling function to the protocol as all risk assessments are being done by the community (investors).

With a stablecoin market with quite a number of participants, this is one step down the line of attempts to attract more value to the protocol. Considering that GHO is directly backed by supplied collaterals, this means more in-flow of assets for stablecoin minting. This stands to generate a lot of income for the DAO at large. The power of stablecoin integration is seen amongst these Defi frameworks, the evolving nature of crypto gives it an edge of advantage over the traditional system of finance, more is really yet to come, development-wise, stay tuned.