Increase GHO Borrow Rate
01Summary
Proposal to increase GHO stablecoin borrow rate from 4.72% APR to 5.22% APR to restore its peg, which is currently trading at ~0.965. ACI is also authorized to implement up to 100 bps incremental increases every 7 days if needed, up to a maximum of 9.5% APR, if the monthly average price remains outside the 0.995-1.005 range.
- Type
- parameter change
Key changes
- Increase GHO borrow rate from 4.72% APR (~4.83% APY) to 5.22% APR (~5.35% APY)(high)
- Update discounted borrow rate to approximately 3.7%-3.75% APY(medium)
- Authorize ACI to implement up to 100 bps incremental increases every 7 days, up to maximum 9.5% APR, if monthly average GHO price stays outside 0.995-1.005 range(high)
Notable concerns
- GHO peg remains significantly off-target at ~0.965 average price despite previous rate adjustment via AIP-349
- GHO borrow rate of 4.83% APY is substantially lower than comparable stablecoins (USDC 6.39%, USDT 7.29%, DAI 6%), suggesting current rate may be insufficient to restore peg
- Proposal grants ACI discretionary authority to make up to 6 consecutive rate increases of 100 bps each within a month if peg target is not met
Generated by Kvorum
02Description
Simple Summary
This AIP proposes to increase the GHO borrow rate from 4.72% APR to 5.22% APR. This aims to support the GHO peg and align borrowing costs closer to industry market rates.
Motivation
Following AIP-349, which allowed for 50 bps increments in the GHO borrow rate, the peg remains off-target at ~0.965 avg price. This increase is part of the direct-to-AIP process to incentivize repayment and help restore the peg.
Specification
- Current Borrow Rate: 4.72% APR - ~4.83% APY
- Proposed Borrow Rate: 5.22% - ~5.35% APY
- New Discounted Borrow Rate: ~3.7% - 3.75% APY
The proposal also authorizes ACI to continue with up to 100 bps incremental increases every 7 days if required up to 9.5% APR if the monthly avg price of GHO stays outside a 0,995<>1,005 price range.
Comparative analysis with other stablecoins on Aave V3 shows that GHO's current borrow rate is lower, which may contribute to its underpeg. The following table illustrates average borrow rates:
| Stablecoin | Average Borrow Rate |
|---|---|
| USDC | 6.39% |
| USDT | 7.29% |
| DAI | 6% |
| GHO | 4.83% (APY) |
Given this discrepancy, it is unlikely that the current rate is sufficient to restore GHO's peg.
References
- Implementation: AaveV3Ethereum
- Tests: AaveV3Ethereum
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The decoded calldata contains a single action: a call to forwardPayloadForExecution, which is the standard Aave cross-chain governance mechanism used to forward execution to a separate payload contract (matching the linked implementation contract 'AaveV3Ethereum_IncreaseGHOBorrowRate_20231121.sol' in the References section). This pattern is typical for Aave AIPs where the mainnet governance proposal forwards execution to a payload contract that contains the actual parameter changes (e.g., updating the GHO interest rate strategy to 5.22% APR and configuring the discount rate). Because the decoded action itself does not expose the specific numeric parameters (borrow rate, discount rate, or the ACI incremental-increase authorization), I cannot directly verify that the forwarded payload matches the specific figures claimed in the description (4.72%→5.22% APR, up to 9.5% APR cap, 100bps/7-day increments). The target address and forwarding pattern are consistent with what would be expected for this type of proposal, and there is no evidence of a mismatched target, hidden transfer, or unrelated action. However, due to the opacity of the forwarded payload in the provided decoded data, confidence in a full match is low rather than high. No contradictions or red flags are present, so the assessment defaults to consistent, but I flag this as low confidence since the core numeric claims cannot be cross-verified against the decoded arguments alone.
Generated by Kvorum
04Actions
- Target
- 0x9aee…2bc7
- Value
- 0 wei
- Function
- forwardPayloadForExecution((uint256,uint8,address,uint40))
- Arguments
{ "0": [ "1", "1", "0xdAbad81aF85554E9ae636395611C58F7eC1aAEc5", "22" ] }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 320x329c…3ed4 | Against | 108.9K | 22.19% | — | 3y ago |
| 070x0703…961b | Against | 86.8K | 17.68% | — | 3y ago |
| 230x2331…7e73 | Against | 60K | 12.23% | — | 3y ago |
| 2C0x2cc1…4df1 | Against | 43.7K | 8.90% | — | 3y ago |
| B90xb933…8dd1 | Against | 42.4K | 8.64% | — | 3y ago |
| EA0xea17…6676 | Against | 38.7K | 7.90% | — | 3y ago |
| EZezr3al.eth0x8659…7d0e | Against | 38.1K | 7.77% | — | 3y ago |
| 570x57ab…2922 | Against | 27.3K | 5.57% | — | 3y ago |
| 870x8787…ea52 | Against | 21.2K | 4.32% | — | 3y ago |
| E40xe459…e666 | Against | 20K | 4.08% | — | 3y ago |
| 180x1855…98ba | Against | 3.6K | 0.73% | — | 3y ago |
| DF0xdf06…4977 | Against | 27.3 | 0.01% | — | 3y ago |
| D40xd4b2…3a4f | Against | 2 | 0.00% | — | 3y ago |
| 570x5762…a752 | Against | 1 | 0.00% | — | 3y ago |
| CF0xcf7a…30b6 | Against | 0 | 0.00% | — | 3y ago |
| 970x9792…960e | Against | 0 | 0.00% | — | 3y ago |
| 650x6523…3920 | Against | 0 | 0.00% | — | 3y ago |
07Forum
No forum thread is confidently linked to this proposal.
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