[AAVE] GHO Borrow Rate Increase

Simple Summary

This AIP will increase GHO borrow rate by 0.7% APR.

Motivation

With the evolving market dynamics and the increasing popularity of GHO as a stablecoin option, it is necessary to maintain competitiveness by aligning borrowing costs with average market rates. The current GHO borrow rate of 7.22% APR (~7.48% APY) no longer meets this requirement.

AIP-381 allows for 100 bps increases in the GHO borrow rate every 7 days while maintaining rates up to 9.5% APR if the monthly average price of GHO stays outside a 0,995<>1,005 price range. The peg has shown improvement but remains below the target.

| Monthly Average Borrow Cost (APR) | Stablecoin | | |

• | | 10.45% | DAI | | 10.89% | LUSD | | 10.91% | USDC | | 11.87% | USDT |

Source: TokenLogic | GHO Analytics

Increasing the non-discounted borrow rate of GHO from 7.22% to 7.92% is proposed to remain competitive, increase protocol revenue, and not negatively affect the peg.

Specification

• Current Borrow Rate: 7.22% APR - ~7.48% APY (non-discounted)
• Proposed Borrow Rate: 7.92% - ~8% APY (non-discounted)
• Discounted Rates: 30% discount
• New Discounted Borrow Rate:
  • GHO: ~5.6% APY

If required, ACI will monitor the GHO peg and use authorized discretion for further rate adjustments in coordination with @karpatkey_TokenLogic Aave finance SPs.

References

• Implementation: AaveV3Ethereum
• Tests: AaveV3Ethereum
• Snapshot: No snapshot for Direct-to-AIP)
• Discussion

Copyright

Copyright and related rights waived via CC0.

https://app.aave.com/governance/v3/proposal/?proposalId=50