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title: [ARFC] Deploy stataUSDC GSM on Base author: @TokenLogic created: 2025-02-05

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Summary

This publication proposes deploying a stataUSDC GHO Stability Module (GSM) on Base supported by a facilitator on Ethereum.

Motivation

This proposal recommends deploying a GSM on Base to enhance GHO's price stability during market fluctuations and facilitate new circulating supply issuance.

Introducing a GSM shortly after launch will help mitigate volatility caused by thin secondary market liquidity while providing users with an alternative way to acquire GHO. Given the various yield opportunities for GHO on Base, limited supply could push GHO above $1.00, as seen during its launch on Arbitrum.

Deploying a stataUSDC GSM would allow users to exchange USDC for GHO, with USDC deposited into Aave Protocol. Each unit of GHO transferred to a user increases the circulating supply, helping to balance market demand.

The chart below compares USDC deposit rates across Aave v3 instances on Ethereum Core, Arbitrum, and Base. Notably, the USDC deposit APY on Base closely aligns with that of Ethereum Core.

All GHO issued by the GSM is backed 1:1, ensuring GHO is always over-collateralised.

The Aave DAO will receive the following revenue streams from the aUSDC GSM:

• Swap Fees;
• Surplus aToken Yield; and,
• Any incentives distributed to USDC deposit on Aave v3.

The aToken yield acts as a proxy for the GHO Borrow Rate. GHO issued by the GSM generates aUSDC yield and GHO Borrowed on Aave v3 generates interest.

The aUSDC revenue is available every block as it accrues, which is unlike the interest accruing from GHO debt that is only received when a user's loan is repaid.

Specification

This instance of the GSM enables users to exchange GHO and USDC at a 1:1 fixed-ratio, with surplus USDC used to mint stataUSDC tokens to earn yield.

The GSM can mint and burn stataUSDC in exchange for USDC based upon user demand.

The ARFC shall incorporate feedback from the community and service providers and detail the final configuration setup before the Snapshot is submitted.

Ethereum <> Base Facilitator

A facilitator will be deployed on Ethereum specifically to support Base. GHO is considered to have entered circulating supply when users exchange USDC for GHO via the GSM on Base.

The initial configuration for the Base GhoDirectMinter facilitator as shown below:

Parameter	Value
Mint Cap	10M Units

This is to be implemented by setting the newFacilitatorBucketCapacity to to 10M.

Reference: GhoDirectMinter

CCIP Configuration

With the launch of GHO on Base now at AIP voting stage, the CCIP Bucket Capacity will be increased by 10M units, matching the GHO supplied to the GSM.

Paramater	Current	Proposed
GHO_Bucket_Capacity	20M	30M

This publication does not include any changes the CCIP Rate Limit Capacity (300,000) and Refill Rate (60/sec).

Reference: GHO Deployment

GSM Configuration

The below provides the initial configuration of the stataUSDC GSM to be deployed on Base.

Parameter	Value
GHO Bucket Cap	10.00M
USDC Exposure Cap	10.00M
Freeze Lower Bound	$0.990
Freeze Upper Bound	$1.010
Unfreeze Lower Bound	$0.995
Unfreeze Upper Bound	$1.005
Mint GHO Fee	0.00%
Burn GHO Fee	0.00%

With GHO being minted on Ethereum and being transferred to the GSM, the Mint() function on the Ethereum instance of stataGSM is to be replaced by Transfer() functionality. Pre-minted GHO held by the stataGSM on Base is to be transferred when USDC is received.

GHO Steward

A new GhoGsmSteward role shall be deployed on Base enabling the GHO Stewards to tailor the GSM configuration to reflect the prevailing market conditions.

Reference: GHO Steward v2

stataUSDC Revenue

A bot, deployed as part of Dolce Vita will periodically claim the revenue to the DAO's treasury.

Disclosure

TokenLogic receive no payment for this proposal.

Next Steps

1. Gather feedback from the community.
2. If consensus is reached on this [ARFC], escalate this proposal to the Snapshot stage.
3. If Snapshot outcome is YAE, escalate this proposal to the AIP stage.

Copyright

Copyright and related rights waived via CC0.