GHO Borrow Rate Increase 2024-02-29
01Summary
Proposal to increase GHO borrow rate from 6.22% APR to 7.22% APR (maintaining 30% discount for discounted rates) to support GHO peg restoration, align with market rates for comparable stablecoins, and increase protocol revenue.
- Type
- parameter change
Key changes
- GHO non-discounted borrow rate increase from 6.22% APR (~6.35% APY) to 7.22% APR (~7.48% APY)(high)
- GHO discounted borrow rate (30% discount) increases to ~5.24% APY from previous rate(medium)
- Discounted rate discount percentage remains unchanged at 30%(low)
Notable concerns
- GHO peg remains outside target range (0.995-1.005) despite recent stability improvements
- Rate increase follows pattern of 100 bps increases allowed every 7 days up to 9.5% APR ceiling per AIP-381
- Risk of further rate increases if peg does not stabilize
Generated by Kvorum
02Description
Simple Summary
This ARFC proposes an increase in the GHO borrow rate from 6.22% APR to 7.22% APR to support the GHO peg restoration further, align borrowing costs with average market rates, and maintain its attractiveness as an option. The discounted rates remain unchanged at a 30% discount.
Motivation
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.
While the peg has improved, it is still outside of the target range. This ARFC continues with the previous proposals for a further increase in the GHO borrow rate.
The GHO peg has shown more stability recently but is still slightly below the target. The average monthly borrow rate on Aave for DAI is 8.41%, LUSD is 7.34%, USDC is 9.01%, and USDT is 8.94%.
Increasing the non-discounted borrow rate of GHO from 6.22% to 7.22% will keep it an attractive option, increase protocol revenue, and is not expected to negatively affect the peg.
Specification
- Current Borrow Rate: 6.22% APR - ~6.35% APY
- Proposed Borrow Rate: 7.22% - ~7.48% APY (non-discounted)
- Discounted Rates: 30% discount
- New Discounted Borrow Rate:
- GHO: ~5.24% APY
If required, ACI will monitor the GHO peg and use authorized discretion for further rate adjustments in coordination with Aave finance SPs.
References
- Implementation: AaveV3Ethereum
- Tests: AaveV3Ethereum
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows the standard Aave governance pattern: a single on-chain action that calls execute() on a dedicated payload contract. This delegatecall-style execution means the actual parameter changes (the new GHO borrow rate values) are encoded inside the payload contract's bytecode/logic, not exposed as decoded arguments in this calldata. As a result, I cannot directly verify the specific 6.22%->7.22% rate change or the 30% discount figure from the decoded action alone — there is simply no parameter data to compare against the prose. This is typical and expected for Aave ARFC/AIP proposals referencing a linked implementation contract (as this one does, linking to a GitHub repo with the exact Solidity payload). Given the address, single execute() call, and reference to a specific GHO rate increase implementation, there is no evidence of a target mismatch, omitted action, or conflicting value — but confidence is necessarily low since the actual rate-setting logic isn't visible in the decoded action. No discrepancy is flagged because the mismatch here is a limitation of calldata visibility, not evidence of intentional or accidental deviation between prose and execution.”,
Generated by Kvorum
04Actions
- Target
- 0x782f…7138
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
No forum thread is confidently linked to this proposal.
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