After a decisive vote by the Aave decentralized autonomous organization (DAO), responsible for proposing and implementing changes to the lending protocol, the GHO stablecoin has been successfully launched on the Arbitrum network.
The DAO of Aave intends to expand the deployment of the GHO stablecoin across multiple networks in the future. However, Arbitrum was chosen initially due to its cost-effective transactions and enhanced transaction throughput as a layer-2 solution.
The phased approach to introducing the stablecoin across various networks reflects careful consideration of security and risk management. This strategy allows the DAO to assess performance before extending the presence of GHO to other blockchain ecosystems.
Facilitating the multi-chain capability of GHO is Chainlink’s CCIP protocol, which enables the Aave DAO to migrate the stablecoin from its initial launch on the Ethereum network to Arbitrum and other networks in forthcoming phases.
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This interoperability is made possible through two mechanisms: the burn-and-mint model and a lock-and-release function. These processes involve locking or burning GHO tokens on the original chain and subsequently releasing them on the new blockchain.
In instances where GHO stablecoins are transferred from Ethereum to another blockchain, tokens are secured in a smart contract known as the “Vault Contract” on Ethereum and minted by a facilitator on the target blockchain.
Conversely, when GHO is moved from a different blockchain to Ethereum, tokens on the alternative chain are burned, and the equivalent amount is released from the Vault Contract on Ethereum.
For chains other than Ethereum, a facilitator oversees the burning of GHO tokens on the source chain and the minting of new tokens on the destination chain.
The collaboration between Chainlink and Arbitrum, which originated in 2020, has evolved into a synergistic partnership aimed at advancing cross-chain development for decentralized applications.
Chainlink, a prominent blockchain interoperability and oracle network, has conducted experimental initiatives to facilitate the seamless transfer of value across various blockchains, collaborating with global institutions such as the SWIFT interbank messaging system.
The adoption of Chainlink’s CCIP has continued to grow in 2024, marked by an increase in network fees, totaling $377,724 in March, driven largely by activities on Arbitrum.
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