Aave Proposes Rate Hike for GHO Stablecoin Amid Price Discount
Aave has proposed changes to its GHO stablecoin's borrowing rate and fees in an effort to stabilize its price, which has been trading below its $1 target. The proposal would raise the base borrowing rate on Horizon to 3.25% from 3.00%, a 25-basis-point increase.
This move aims to address supply and selling dynamics that have accompanied a sharp expansion of GHO borrowing on Horizon, which has seen a 68% increase in debt over the past month.
The proposal also includes changes to Stability Module redemption fees across various networks, including Ethereum, Monad, and Arbitrum. The USDC redemption fee would increase to 15 basis points from 10 basis points, while the Ethereum USDT redemption fee would decrease to 10 basis points from 15 basis points.