White Star Capital Digital Asset Fund - newsletter #90
Aave to launch overcollateralized stablecoin - GHO
Aave to launch overcollateralized stablecoin - GHO
White Star Capital Digital Asset Fund - newsletter #90
What is Aave?
Aave is a decentralized lending system that allows users to lend, borrow and earn interest on crypto assets, all without middlemen.
Running on the Ethereum blockchain, Aave instead is a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software. This means Aave users do not need to trust a particular institution or person to manage their funds. They need only trust that its code will execute as written.
Like other decentralized lending systems on Ethereum, Aave borrowers must post collateral before they can borrow. Further, they can only borrow up to the value of the collateral they post. Borrowers receive funds in the form of a special token known as an aToken, which is pegged to the value of another asset. This token is then encoded so lenders receive interest on deposits.
A borrower may post collateral in DAI, for example, and borrow in ETH. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright. Aave can also introduce additional features, such as instant loans, and other forms of issuing debt and credit that take advantage of the unique design properties of blockchains.
The DAO will decide…
Aave's proposal for a new stablecoin is now in the hands of its DAO—its community of AAVE token holders that vote on decisions that affect the protocol's future. Should the vote succeed, it will mean one of the biggest players in DeFi will introduce yet another stablecoin option into the market—something that could prove lucrative for its DAO if GHO gains wide adoption.
The fully collateralized stablecoin will be native to the Aave ecosystem and available on the Ethereum network initially. It is expected to be offered on other Aave-supported blockchains based on future community votes.
Community voting for the creation of GHO is expected to begin soon. Sentiment among Aave users remained mostly positive. However, there were concerns around Aave controlling the interest rates offered to users and the intent of arbitrageurs who would work to maintain GHO’s $1 peg.
A Stablecoin, for what?
Still a proposal, the plan is for Aave to allow users to mint GHO tokens against their supplied collaterals. GHO would be backed by a basket of cryptocurrencies chosen at the users’ discretion, while borrowers would continue earning interest on their underlying collateral.
This would work similarly to existing algorithmic stablecoins, which mint exactly $1 worth of tokens when users provide $1 worth of cryptocurrency. In GHO’s case, a user must supply collateral (at a specific collateral ratio) to be able to mint GHO. And when a user repays a borrow position (or is liquidated), the GHO protocol burns that user’s GHO, the proposal explained.
If approved, the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive, provide more optionality for stablecoin users and generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO borrows to the DAO.
How to avoid the Terra scenario?
For a start, unlike Terra’s stablecoin, GHO will not be an algorithmic stablecoin, and its features will not resemble algorithmic stablecoins.
Aave’s proposed GHO stablecoin falls into the category of decentralized and collateralized tokens, putting it in the same class as DAI, MakerDAO’s stablecoin, which is collateralized by MKR tokens and other crypto assets. If all goes according to plan and AAVE holders vote to approve GHO, the stablecoin will be backed by a diversified set of crypto-assets, according to the proposal.
Aave Companies also added that “significant risk mitigation features” will be in place to prevent too much GHO from being minted—which will protect users.
🔦 White Star & Portfolio Spotlight
Superfluid money streaming aims to redefine real-time investing
Real-time investing has advantages of time efficiency, gradual exposure, and networked cashflows.
Paraswap goes live on Arbitrum
Paraswap continues it’s multi-chain expansion by launching on a L2 network.
Paraswap Mobile beta program on iOS
The mobile app will give users a user-friendly experience at their fingertips.
🏦 Enterprises & Institutions
Brazil's PicPay to launch crypto payments and real-pegged stablecoin
PicPay, a Brazilian mobile payment app with 30 million active users, plans to start supporting crypto payments.
GameStop releases public beta NFT marketplace
GameStop has launched its NFT marketplace enabling gamers, creators, collectors and others to buy, sell and trade NFTs.
Major South Korean telecom company plans launch of blockchain wallet for crypto and NFTs
SK Telecom has signed a joint agreement with other blockchain firms aimed at developing a digital wallet that can support cryptocurrencies, nonfungible tokens and digital credentials.
EU-regulated firm Banking Circle adopts USDC stablecoin
Banking Circle, a European bank focused on cross-border payments, is adopting a major U.S. dollar-pegged stablecoin for payment rails.
⚖️ Government & Regulation
US crypto regulation bill aims to bring greater clarity to DAOs
The Responsible Financial Innovation Act proposes a comprehensive set of regulations for the digital assets sector, and one potentially impactful section is DAOs.
Russian lawmaker proposes adding crypto market to Moscow Stock Exchange
A leader within Russia's State Duma has come out in support of a crypto market within the Moscow Stock Exchange, or MOEX.
Binance's Spanish subsidiary approved to operate as crypto service provider
Binance’s Spanish subsidiary has clinched approval as a Virtual Asset Services Provider in Spain.
💰 Funding & Exits
Gnosis Safe raises 100M in token deal and rebrands as Safe
Gnosis Safe will use the raise to expand its smart contracts account ecosystem.
Morpho, a DeFi lending protocol, raises 18M in token sale
Morpho optimizes DeFi yield by peer to peer matching built on top of Compound and AAVE.
Quadrata, a web3 identity passport, raises 7.5M in seed round
Quadrata passport offers compliance infrastructure through a unique decentralized identity.
Bravo Ready, a gaming studio, raises 3M seed round
Their game BR1: Infinite Royale is built on Solana as a battle royale game.
Li.Fi, an infrastructure protocol, raises 5.5M round
Li.Fi will aggregate cross-chain bridges and decentralized exchanges.
DeepNFTValue, an NFT infrastructure project, raises 4M round
DeepNFTValue uses machine learning techniques to estimate the value of NFTs factoring in rarity and attributes.
Thalex, an exchange platform, raises 7M round
Thalex will use the series A round to grow its crypto futures and options platform.
🚀 Project Launches & Updates
VC firm Konvoy launches new $150M fund, eyes blockchain-based games
Gaming venture capital firm Konvoy launches new $150 million fund, with a portion set to be invested in cryptocurrency and blockchain-based games.
Shanghai Allocates $1.5B to Metaverse Development Fund
Shanghai’s new industry fund will broadly invest in the metaverse, as well as smart terminals and energy projects.
Crypto investor Sequoia Capital China reportedly raises $9 billion
Sequoia Capital China, the Chinese affiliate of cryptocurrency-friendly venture capital firm Sequoia Capital, is about to raise $9 billion for its four new funds focused on Chinese startups.
Multicoin Capital Announces New $430M Venture Fund
Multicoin Capital, the crypto investment firm known for its backing of multiple Web3 and DeFi projects, announced its third $430 million venture fund.
Lightspeed raises $500 million to invest in startups across India, Southeast Asia
Lightspeed has raised $500 million for its newest India and Southeast Asia fund, its largest for the regions, as it looks to make deeper investments in the South Asian market that is increasingly attracting global investors.
🔥 Other Bits We're Excited About
Reddit plans to release blockchain based avatars
The collectible avatars will be released on Polygon.
Robinhood allows crypto transfers on platform
The move will give Robinhood more wallet like capabilities.