GHO

GHO is a stablecoin minted directly against collateral deposited in a major lending protocol. The structural difference from ordinary borrowing matters: because the protocol creates the asset rather than lending someone else's deposit, the interest paid accrues to the protocol treasury instead of to a lender.

Minting is not the same as borrowing

Conventional borrowing matches you with a depositor whose funds you use and pay interest to. GHO is created at the moment of borrowing and destroyed on repayment. There is no depositor, so no one competes for the interest — the whole payment goes to the treasury.

Rates become a policy choice, not a market outcome

Ordinary lending rates float with utilisation. Because GHO has no depositors to compensate, governance sets the borrowing rate directly. That allows a stable, predictable cost of borrowing, and it means the rate reflects a decision rather than supply and demand.

Discounts for aligned holders

Holders staking the protocol's governance token receive a reduced borrowing rate, tying stablecoin usage to participation in the protocol's insurance mechanism. It is a coherent incentive: those backstopping the system borrow more cheaply from it.

The peg depends on the same things as any CDP stablecoin

Overcollateralisation, functioning liquidations and arbitrage between the minting rate and the secondary market. If the market price drifts above target, minting and selling is profitable; below, buying and repaying is. Those arbitrage paths are what hold it, and they require liquidity to work.

Where it sits

GHO is a natural extension of a lending protocol into issuance, capturing revenue that would otherwise go to depositors. Its risk is the protocol's risk: the same collateral, the same liquidation engine, the same oracles.