KVORUM
aaveSource: Aave governance v3 · #46

GHO Borrow Rate Increase

canceledMar 15, 2024, 02:51 PM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

Increase GHO borrow rate from 7.22% APR to 7.92% APR (0.7% increase) to improve competitiveness with other stablecoins and increase protocol revenue while monitoring the GHO peg.

Type
parameter change

Key changes

  • Increase non-discounted GHO borrow rate from 7.22% APR (~7.48% APY) to 7.92% APR (~8% APY)(high)
  • Discounted GHO borrow rate (with 30% discount) will be approximately 5.6% APY(medium)
  • ACI authorized to monitor GHO peg and make further rate adjustments in coordination with service providers(medium)

Notable concerns

  • GHO peg remains below target despite improvement
  • Rate increase is still below competing stablecoins (DAI at 10.45%, LUSD at 10.89%, USDC at 10.91%, USDT at 11.87%)
  • Future discretionary rate adjustments authorized for ACI without requiring additional governance votes
ContractsGHO
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

250 words

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

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorum

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04Actions

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05Tally

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07Forum

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