Aave DAO approving overcollateralized stablecoin splits crypto community

cointelegraph.com

Aave DAO approving overcollateralized stablecoin splits crypto community

cointelegraph.com

Kapow@exploding-heads.comM to

Crypto - DeFi@exploding-heads.com · 2 years ago

The proposal received 99.9% votes in favor, and over 500,000 AAVE tokens were pledged by voters for creating the overcollateralized stablecoin GHO.

Aave is a noncustodial decentralized crypto lending and borrowing platform and hopes to leverage its overcollateralized stablecoin to offer better liquidity and passive income opportunity.

Given that GHO will be overcollateralized, users must always deposit a higher amount of crypto than the minting value of the GHO. This should ensure an overcollateralized loan on the stablecoins. Once the user repays the loan, their position will be liquidated and their borrowed GHO will be burned.

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Decentralized Finance (DeFi) is an alternative to traditional financial services. More specifically, DeFi consists of smart contracts, which, in turn, power decentralized applications (DApps) and protocols.

Many of the initial DeFi applications were built on Ethereum, and the majority of the ecosystem’s total value locked (TVL) remains concentrated there.

Here are some of the ways people are engaging with DeFi today:

Lending: Lend out your crypto and earn interest and rewards every minute - not once per month.
Getting a loan: Obtain a loan instantly without filling in paperwork, including extremely short-term “flash loans” that traditional financial institutions don’t offer.
Trading: Make peer-to-peer trades of certain crypto assets — as if you could buy and sell stocks without any kind of brokerage.
Saving for the future: Put some of your crypto into savings account alternatives and earn better interest rates than you’d typically get from a bank.
Buying derivatives: Make long or short bets on certain assets. Think of these as the crypto version of stock options or futures contracts.

WARNING: Investing in NFTs, cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and these links and discussions are not recommendations by Exploding Heads or the writer to invest in NFTs, cryptocurrencies or other ICOs.

Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Exploding Heads makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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