[ARFC] Onboard USDG to Aave V3 Core Instance

[ARFC] Onboard USDG to Aave V3 Core Instance

Author: ACI

Date: 2025-10-17

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Proposal updated with latest Risk Parameters provided by Risk Service Providers 2025-12-04

Summary

We propose the onboarding of USDG, a USD-backed stablecoin issued by Paxos, on Aave V3 Core Instance. This listing would initially enable users to deposit USDG to earn yield and borrow USDG as a stable asset. Collateral usage will be considered at a later date following review by Aave's Risk Management teams. TEMP CHECK has passed as well as TEMP CHECK Snapshot

Motivation

USDG is a regulated stablecoin backed 1:1 by cash and short-term U.S. Treasuries, designed with regulatory compliance and transparency as core principles.

As a trusted stablecoin from Paxos, a regulated financial institution with a strong track record, USDG has gained significant adoption across various platforms, demonstrating market confidence and growing utility.

Key differentiators:

1. Regulatory compliance: USDG is fully regulated and issued by Paxos, a New York State Department of Financial Services regulated entity.
2. Transparency: Regular attestations verify USDG's reserves are fully backed by cash and short-term U.S. Treasuries.
3. Chainlink price feed: Live and available for use in Aave integrations.

Specification

Risk Parameters will be provided by Risk Service Providers and proposal will be updated accordingly.

| Parameter | Value | | --- | --- | | Asset | USDG | | Isolation Mode | No | | Borrowable | Yes | | Collateral Enabled | No | | Supply Cap | 30,000,000 | | Borrow Cap | 25,000,000 | | Debt Ceiling | - | | LTV | - | | LT | - | | Liquidation Bonus | - | | Liquidation Protocol Fee | - | | Variable Base | 0% | | Variable Slope1 | 6.00% | | Variable Slope2 | 50% | | Uoptimal | 80% | | Reserve Factor | 20% |

USDG Overview:

• Ticker: USDG
• Fiat backed stablecoin
• Issuer: Paxos
• Backing assets: USD cash and short-term U.S treasuries.
• Audits: Multiple third-party audits
• Price Oracle: Chainlink
• USDG Listed on: Major centralized and decentralized exchanges.

Use Cases:

1. Deposits enabled for yield generation
2. Borrowing enabled as a low-volatility asset

Incentives:

Paxos is considering incentive programs to boost adoption and enhance the competitiveness of USDG borrowing rates compared to other stablecoin assets on Aave.

Detailed incentive structures will be shared with Aave DAO contributors and the community in the ARFC stage.

Disclosure

The current proposal has been powered by Skywards. ACI is not affiliated with Paxos and has not received compensation for the creation and review of this proposal.

Next Steps

1. Publication of a standard ARFC to continue collecting community & service provider feedback before escalating proposal to ARFC snapshot stage.
2. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.

Copyright

Copyright and related rights waived via [CC0]