What is GHO? Aave's stablecoin explained

GHO is a dollar stablecoin minted by Aave borrowers against collateral they've already supplied, with its borrow rate and savings rate both set by Aave governance, and its main test has always been holding exactly $1.

GHO is the Aave protocol's own dollar stablecoin. Borrowers mint it against collateral supplied to Aave, and the interest they pay flows to the Aave DAO treasury. It launched on Ethereum on 15 July 2023 and had about $698 million in circulation on 27 September 2026, according to DefiLlama, close to its all-time high of $699 million set in August. Holders can deposit it into Savings GHO (sGHO), which paid a fixed 4.50% on the same date, according to Aave's documentation.

The name is pronounced "go" and isn't an acronym. What sets GHO apart from fiat-backed coins such as USDC is where new supply comes from: a loan taken out inside Aave, against crypto valued above the loan, with the rate chosen by governance instead of a utilisation curve. That design gives Aave a revenue stream and a native asset for its markets, and it also explains why GHO spent its first six months trading below $1.

Common GHO terms

How GHO is minted

A user supplies collateral, such as ETH, wrapped bitcoin or a stablecoin, to an Aave market where GHO is enabled, then borrows GHO against it up to the market's loan-to-value limit. The GHO is created at that moment, whereas every USDC borrowed on Aave was first deposited by a supplier. Repaying the loan burns the GHO, so supply rises and falls with borrowing demand. If the collateral loses value and the position crosses its liquidation threshold, liquidators repay the GHO debt and take the collateral at a discount, the same mechanism described in our guide to how DeFi lending works.

With no pool of lenders behind GHO, governance sets the borrow rate directly. On Aave's Ethereum Core market, stewards raised the rate from 3.75% to 4.25% in two steps from late August 2026, and on 15 September the rates stood at 4.25% on Core, 3.84% on Prime and 3.00% on Horizon, with Horizon proposed to rise to 3.25%, according to the GHO Stewards' September update. On Core, all of that interest goes to the Aave treasury under a 100% reserve factor.

Facilitators and bucket caps

Any contract that can create GHO has to be approved by governance as a facilitator and given a bucket capacity, the ceiling on what it can mint. Aave's facilitator page lists four: the Aave V3 Ethereum market, a cross-chain facilitator that locks GHO on Ethereum and mints it on other networks through Chainlink's CCIP, the GHO Stability Module, and a flashmint facilitator that lends GHO within a single transaction. Newer markets such as Prime and Horizon also mint through facilitators. The design lets Aave add new sources of GHO, and new chains, without touching the token contract, while capping how much any one source can issue.

On 27 August 2026, debt drawn from Aave markets accounted for roughly 69% of GHO issuance and stablecoins swapped into the GSMs for the other 31%, according to the GHO Stewards' August update. The same post lists GHO borrow markets on Base, Avalanche, Arbitrum, Gnosis, Plasma, X Layer, Mantle, Ink and Monad alongside Ethereum.

The GHO Stability Module

The GSM lets anyone swap USDC or USDT for newly minted GHO at 1:1 with no fee, and swap GHO back for the underlying stablecoin for a small fee. In September 2026 that exit fee was 15 basis points on the USDC modules and 10 on the Ethereum USDT module. The module gives GHO a floor: when GHO trades below $1 by more than the exit fee, a trader can buy it cheaply, redeem it at par and keep the spread, which lifts the price. The stablecoins inside the module are held as Aave aTokens, so the backing also earns lending yield for the DAO.

Savings GHO (sGHO) and stkGHO

Aave runs two separate products for GHO holders, and they carry very different risks: sGHO works like a savings account, while stkGHO is insurance capital for Aave's markets. The names overlap because Aave's first savings product, launched in July 2025, was a rebranded version of the staked GHO contract that paid rewards claimed separately through Aave's Merit programme.

The current sGHO is a standard ERC-4626 vault on Ethereum. A depositor puts in GHO and receives shares whose GHO value rises every second at a rate set by governance. According to the sGHO launch configuration proposed on 25 March 2026, deposits stay in the contract and aren't lent out, withdrawals are instant, there's no slashing, and the DAO pays the yield from its treasury. It launched with a fixed 4.25% APR, set 50 basis points above the Sky Savings Rate, and the Risk Council, a 3-of-4 multisig of Aave service providers, raised it to 4.50% in August 2026. On 27 September Aave's docs showed 163.6 million GHO in the vault, and the stewards estimated in August that roughly three quarters of circulating GHO sat in savings products.

stkGHO lives in Umbrella, the safety module that replaced Aave's older staking system. Stakers earn rewards, and if a GHO market runs up bad debt, the contract automatically burns staked GHO to cover it. Unstaking takes a 20-day cooldown followed by a 2-day withdrawal window. Its rewards are payment for carrying that risk, which puts stkGHO in a different category from sGHO.

Sources: Aave docs and the sGHO launch configuration. The sGHO rate is a governance decision and can be lowered as well as raised. Tools for converting a quoted APR into an APY are in our guide to APY in crypto.

GHO's peg history

GHO traded below $1 from the day it launched. It changed hands between $0.97 and $0.99 through its first month and dipped to $0.94 for a moment on 8 August 2023, according to DL News, which reported fewer than 23 million GHO in circulation at the time. Researchers quoted in the piece put it down to thin demand and the lack of any way to redeem GHO for $1: borrowers could mint it and sell it, and nothing pulled the price back up. Aave founder Stani Kulechov argued the peg would follow once the stability module shipped.

Weekly prices on DefiLlama show the discount widening to about $0.96 in November 2023, while governance raised the borrow rate several times to make minting less attractive. GHO climbed above $0.99 in late January 2024, and from May 2024 it generally traded within a few tenths of a cent of $1. It has since spent brief stretches slightly above par as well as below.

The pattern returned on a smaller scale in mid-2026. The stewards' August update describes GHO trading as much as 26 basis points under par, driven partly by weakness in USDT, while the Ethereum USDT stability module lost about a quarter of its backing to redemption arbitrage. By mid-September GHO was 7 to 14 basis points below $1 and the same module had fallen to 18.6 million USDT. Stewards traced much of the pressure to cheap borrowing on Horizon, where users borrowed GHO at 3% and sold it to buy more real-world-asset collateral, and responded with rate rises. DefiLlama priced GHO at $0.9991 on 27 September 2026. Our explainer on why stablecoins depeg covers how other coins have handled the same test.

GHO supply and where it lives

GHO supply grew from about $22 million a month after launch to $152 million at the end of September 2024, $495 million at the end of 2025 and $698 million on 27 September 2026, per DefiLlama. DefiLlama counts $643 million on Ethereum and $56 million on Monad; GHO bridged to other chains through CCIP is locked on Ethereum first. For scale, Aave held about $19.3 billion in deposits net of borrowing on the same date, so GHO is a small share of the protocol it belongs to.

Supply figures from DefiLlama. Each savings version pays a rate set by its own protocol, and none is guaranteed. Fiat-backed coins work differently again: PYUSD and USDC are issued by regulated companies against cash and Treasuries, and their issuers pay holders nothing.

Where GHO fits for stablecoin holders

For a holder, GHO trades one kind of dependence for another. There's no bank or trust company holding reserves, so there's no issuer to freeze a balance or fail; in exchange, the coin relies on Aave's collateral, liquidations, oracles and governance, and on the GSMs having enough USDC and USDT to absorb redemptions. The sGHO rate is paid by the DAO out of the interest GHO borrowers pay and the yield on GSM backing, and it only works while that income exceeds the savings bill, a spread the stewards track in each rate update.

sGHO is one example of a broader pattern: a stablecoin issuer wrapping its savings rate in a standard vault share so exchanges, wallets and other protocols can plug it in. Upshift builds stablecoin vaults on the same ERC-4626 foundation, with curators such as Sentora allocating deposits across lending markets and strategies inside limits set by an onchain risk management framework. Upshift's contracts have been through 10 smart contract audits by 6 independent firms. Returns on any of these products vary, and holders take on the smart contract and strategy risk of each layer they add.

Risks

• Peg: GHO has traded below $1 for long stretches, most sharply in 2023. The GSM only defends the peg while it holds stablecoin backing, and the Ethereum USDC module was empty in September 2026
• Collateral and liquidation: GHO is backed by loans against crypto and tokenised assets. A sharp crash that outpaces liquidations would leave bad debt, which stkGHO stakers and then the DAO absorb
• Governance: borrow rates, GSM fees, bucket caps and the sGHO rate are all set by Aave governance and its stewards, and can change at short notice
• Savings rate funding: sGHO is paid from the DAO treasury, so a lower GHO income could mean a lower rate
• Smart contracts: the GHO contracts have been audited 12 times by OpenZeppelin, Sigma Prime, ABDK, Certora and Emanuele Ricci, per Aave's governance forum, and sGHO separately by Certora and Sherlock. Audits reduce risk without removing it
• Bridges and chains: GHO on networks other than Ethereum depends on the CCIP bridge and on each chain's Aave deployment

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

What is GHO in crypto?
GHO is Aave's dollar stablecoin. It's minted when users borrow against collateral supplied to Aave, and the interest goes to the Aave DAO.

What is GHO backed by?
Mostly by overcollateralised loans in Aave markets, about 69% of issuance in August 2026, with the rest backed by USDC and USDT held in the GHO Stability Module.

How does GHO keep its $1 peg?
Governance adjusts the borrow rate to cool or encourage minting, and the GSM lets traders redeem GHO for USDC or USDT at 1:1 minus a small fee when it trades below $1.

What is sGHO?
Savings GHO, an ERC-4626 vault on Ethereum that pays a governance-set rate on deposited GHO. It paid 4.50% on 27 September 2026, with instant withdrawals and no slashing.

What is the difference between sGHO and stkGHO?
sGHO is a savings product with no slashing. stkGHO is staked in Aave's Umbrella safety module, earns rewards for covering bad debt, can be burned if a deficit occurs, and takes 20 days to unstake.

Has GHO ever depegged?
Yes. It traded between roughly $0.94 and $0.99 from July 2023 until early 2024, and slipped up to 26 basis points below par in mid-2026. It was at $0.9991 on 27 September 2026.

Is GHO decentralised?
It has no company issuer. Minting, rates and fees are controlled by Aave governance, which delegates some parameter changes to a small group of service providers.

Keep reading

• DeFi lending explained. How lenders earn on Aave and get their money out.
• What is USDS? Sky's stablecoin and the savings rate sGHO is priced against.
• What is Ethena USDe? A synthetic dollar with a very different backing.
• Which stablecoin is safest? How the major coins compare on backing and track record.
• How to create a stablecoin. The design choices behind coins like GHO.