DeFi heavyweight Aave reportedly disclosed details of its release for an overcollateralized stablecoin dubbed GHO, subject to the community decentralized autonomous organization’s (DAO’s) authorization.

Specifically, the announcement regarding the new plan was reportedly issued by Aave Companies – the centralized entity supporting the Aave protocol – via its Twitter page on July 8th. 

“We have created an ARC for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO.”

As outlined in the governance proposal shared on July 8th, GHO is reportedly going to function as an Ethereum-powered and decentralized stablecoin pegged to the U.S. dollar, which is available for collateralization with numerous assets of the user’s choice.

To acquire GHO, it would be mandatory for users to mint the stablecoin against their deposited collateral. Nonetheless, the list of supported collateralized assets and the collateral ratio has not been revealed specifically yet.

As users are essentially borrowing the stablecoin against their holdings, the position will need to be overcollateralized as per any normal Aave loan.

“With community support, GHO can be launched on the Aave Protocol, allowing users to mint GHO against their supplied collaterals. GHO would be backed by a diversified set of crypto-assets chosen at the users’ discretion, while borrowers continue earning interest on their underlying collateral.”

The proposal further claimed that 100% of the interest payments accrued by GHO minters would be “directly transferred to the AaveDAO treasury, instead of the standard reserve factor collected any time users borrow other assets.

Holders of the staked AAVE token (stkAAVE) would also be beneficial from the stablecoin’s adoption, since Aave Companies put up a proposal for them to have the power to mint and borrow GHO at a discounted rate.