[ARFC] Launch aUSDC GSM on Ethereum
title: [ARFC] Launch aUSDC GSM on Ethereum author: @karpatkey_TokenLogic created: 2024-10-18
Summary
This publication proposes deploying a new aUSDC GHO Stability Module (GSM) and migrating USDC from the existing GSM on Ethereum.
Motivation
After a successful TEMP CHECK, the existing USDC GSM is to be replaced with an aUSDC GSM. Migrating to an aUSDC GSM is expected to improve the overall investment prospects of GHO by introducing a new aToken revenue stream for the DAO.
With 8M of USDC from the existing GSM deposited into Aave v3, it would represent less than 10% of the available liquidity in the USDC Reserve. With sufficient growth upside remaining for the aUSDC GSM on Ethereum, the DAO can increase the amount of USDC backing GHO. In addition, separate instances of non USDC aToken GSMs can be deployed to diversify GHO's collateral across other reserves on Aave.
The existing GSM implementation has USDC exposure capacity set at 8M units. When combined with another 8M of USDT, this represents over 10% of GHO's supply not generating any revenue for the DAO. The GHO Stewards elected to not pursue increasing the Exposure Capacity of USDC and USDT to encourage new GHO entering circulating supply via the main market. As a result, GHO traded above peg and it tooks several weeks for newly borrowed GHO to enter circulating supply.
With the introduction of yield generating assets within the GSM, the GHO Stewards are much more likely to increase the Bucket Capacity and Exposure Capacity of the aToken GSMs to support newly minted GHO entering circulating supply. This is expected to enable GHO to grow more freely whilst partially mitigating GHO trading above/bellow peg. In addition, the more capital is accrued there, the better safeguarded from an extended de-peg GHO is. GSM protects deviations on both sides
Specification
The below details the configuration of the aUSDC GSM.
| Parameter | Value |
|---|---|
| Bucket Capacity (GHO) | 16.00M |
| Exposure Capacity (USDC) | 8.00M |
| Price Strategy | 1:1 |
| 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 | 0.20% |
The Exposure Capacity is to be increased by the GHO Stewards upon successful upgrade/migration.
The previous version of the USDC GSM is to be disabled and all liquidity migrated to the new version.
Disclosure
TokenLogic and karpatkey receive no payment for this proposal.
Next Steps
- Gather feedback from the community.
- If consensus is reached on this [ARFC], escalate this proposal to the Snapshot stage.
- If Snapshot outcome is YAE, escalate this proposal to the AIP stage.
Copyright
Copyright and related rights waived via CC0.
Off-Chain Vote
YAE
818.38K AAVE100%
NAY
0.29 AAVE0%
ABSTAIN
0.42 AAVE0%
Discussion
Timeline
Oct 25, 2024Proposal created
Oct 26, 2024Proposal vote started
Oct 29, 2024Proposal vote ended
Feb 12, 2026Proposal updated