On August 26, Aave Labs proposed an update to the GHO Stabilization Module (GSM), which plans to use shares of the BlackRock-managed BUIDL crypto fund to maintain the GHO stablecoin’s price peg to the US dollar.

Under the proposal, the new GSM would allow Aave to exchange users’ USD Coin (USDC) to mint GHO, a dollar-backed stablecoin in Aave’s ecosystem, for BUIDL shares. These tokens would be stored in a smart contract until users redeem GHO for USDC.

BUIDL shares are priced at a stable $1 per token and pay daily returns to investors every month. The fund allocates its assets between cash, U.S. Treasury bonds, and repurchase agreements. According to data from RWA.xyz, BUIDL currently has over $502 million in assets under management.

Source: rwa.xyz

Boosting GHO's Market Cap

The proposal emphasizes that the new GSM not only expands the Aave DAO’s yield pool into the real-world asset (RWA) space, but also opens up opportunities for collaboration with BlackRock.

This is a significant move for GHO, as the stablecoin currently has a market capitalization of around $120 million. Despite posting a 146% increase since May 1, GHO still lags behind major competitors like PYUSD and FDUSD, which have market capitalizations of $1 billion and $2.8 billion, respectively.

Aave Labs is banking on BUIDL’s liquidity and integration with USDC to support the maintenance of GHO’s peg to the dollar. Shareholders of the BlackRock-managed BUIDL crypto fund can redeem their shares for USDC at any time with approved holders.

This is the second GSM deployed for GHO, following a January proposal to create two smart contracts supporting the exchange of GHO for USDC and Tether USD (USDT).

Furthermore, USDC issuer Circle has also provided a $100 million redemption fund to ensure conversion from BUIDL to USDC via GHO/USDC GSM. Currently, the fund has $74.7 million USDC available.

According to the proposal, swap fees would be accumulated in GHO, and dividends would be paid monthly in BUIDL. Additionally, GSM may or may not incorporate an additional USDC reserve to offset gas costs when performing BUIDL swaps for small swaps; this will be further evaluated.

The proposal is currently in a “temporary testing” phase, which is typically used to gauge the response from members of Aave governance. If the response is positive, AAVE token holders will have the opportunity to vote on the new GSM proposal.

Tokenized Treasury Bond Fund Surpasses $2 Billion in Market Cap Thanks to BlackRock’s Explosive Growth

Tokenized Treasuries are digital representations of U.S. government bonds that can be traded as tokens on blockchains like Ethereum, Stellar, Solana, Mantle, and many others. While the $2 billion figure is an impressive milestone for recently launched funds, the potential for growth is huge given the sheer size of the $27 trillion Treasury bond market.

The largest fund, BUIDL, has been a major contributor to this year’s surge in market capitalization. Just six weeks after launching in late March, BUIDL became the largest tokenized Treasury fund with a market capitalization of $375 million. The fund now has $502 million in assets. Competitors include Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX) and Ondo’s U.S. Dollar Yield (USDY), both of which have seen strong growth.

However, much of the recent growth has come from smaller issuers, according to data from rwa.xyz. Hashnote’s products have grown nearly 50% to $218 million over the past month. Meanwhile, OpenEden and Superstate’s products have grown 37% and 18%, respectively, over the same period, both approaching the $100 million mark in market capitalization.

Tokenized Treasury Bond funds have become a popular investment vehicle for crypto traders looking to diversify their portfolios and take advantage of the rapid rise in Treasury bond yields in recent years, while still being able to execute trades at any time.

The yield on the 10-year U.S. Treasury note is currently at 3.81%, compared with 1.5% four years ago. Similarly, the yield on the 2-year note has risen to 3.92%, from near zero in 2020 and 2021.

Source: https://tapchibitcoin.io/aave-labs-on-dinh-gho-bang-co-phan-buidl-cua-blackrock.html