Aave Labs proposed an update to its GHO Stability Module (GSM) on August 26 that includes using shares of BlackRock’s BUIDL tokenized fund to maintain its stablecoin’s peg to the dollar. According to the proposal, the new GSM would allow Aave to exchange users’ USD Coin (USDC) provided to issue its ecosystem-native dollar-backed stablecoin GHO for BUIDL shares. The tokens would be held in a smart contract until the user redeems their GHO for USDC.
BUIDL shares have a stable value of $1 per token and pay out monthly returns to their investors. The fund distributes its assets across cash, U.S. Treasury bills, and repurchase agreements. BUIDL has over $502 million in assets under management (AUM), according to RWA.xyz. The proposal notes that this new GSM expands the Aave DAO’s revenue streams into the real world asset (RWA) sector and increases partnership opportunities with BlackRock.
According to the proposal, swap fees will be accumulated in GHO, with dividends paid monthly in BUIDL. Additionally, the GSM may or may not integrate a USDC buffer to offset the cost of redeeming BUIDL gas for small swaps, which will be further priced later. The proposal is still in the temporary review phase, which is typically used to see how Aave’s governance members react to the proposal. If the reaction is largely positive, AAVE token holders will be able to vote on the new GSM proposal. At the time of writing, only one user had left a comment, expressing a generally positive response to the proposal.
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