Aave raises GHO interest rate to 4.5 percent in Core market

Aave has adjusted the borrowing rate for its stablecoin GHO in the Core market on Ethereum, raising it to 4.5%. This move aims to address concerns about the stablecoin’s exit liquidity. The change aligns the Core GHO rate with the 4.5% rate reported for sGHO, eliminating a previous 25-basis-point difference that required DAO funding.

The adjustment was made between October 3 and 4, as recorded by the Core GHO data dashboard. On October 3, the GHO APR in Core stood at 4.25%, but by October 4 and 5, it had risen to 4.5%. The protocol hopes that the higher rate will encourage borrowers to close their positions through stability modules, thereby bringing stablecoins back into the system.

However, the change alone does not fully resolve conversion liquidity issues. Users still need to convert GHO into USDC or USDT through separate market or module steps. Additionally, a decline in outstanding debt from 116 million GHO on October 2 to 115.8 million on October 5 does not necessarily indicate improved exit liquidity.

In the Prime segment, the borrowing rate remained relatively stable, with 4.17% on October 5 compared to 4.22% at midnight. The alignment of cost and yield was specific to the Core market and the 4.5% rate for sGHO. Aave also noted that deposits in the native sGHO vault are not rehypothecated, and that pause status and per-user withdrawal limits affect vault availability but are distinct from the stablecoin stock needed for conversions.