Aave in 2025: The Three Horsemen of GHO (stkGHO, anti-GHO, sGHO)

Introduction

The GHO stablecoin, native to the AAVE protocol, was launched in July 2023. At launch, users could deposit collateral to borrow GHO at a reduced rate if they staked AAVE.

Initially, borrowing was only possible through minting new GHO. The staking module was introduced in January 2024, allowing GHO holders to earn additional interest through AAVE token emissions. The second revenue stream for GHO stakers came in February 2024 with the launch of the Merit Program by AAVE Chan Initiative (ACI), one of the protocol’s main contributors.

With the upcoming launch of AAVE Umbrella and the activation of the protocol’s fee switch, we decided to take a closer look at the different forms of GHO and the yields users can earn.

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Context

Stablecoins keep hitting new records. Since the beginning of the year, the total amount of stablecoins in circulation has grown from $200 billion to over $230 billion—a 15% increase in just 3 months. This is undoubtedly one of the few sectors that continues to grow under current market conditions.

Moreover, the major stablecoin players, present for many years, have recently undergone major changes. On one side, Circle (issuer of USDC) obtained MiCA approval in Europe. On the other, Tether is prioritizing a full audit of its reserves by one of the Big 4 firms following the appointment of a new CFO.

Decentralized stablecoins have also had to reinvent themselves. The best-known today, MakerDAO’s DAI, has rebranded to USDS, with the entire ecosystem renamed from Maker to Sky. Other stablecoins launched during the previous cycle, like Curve’s crvUSD, have remained relatively stable, while FRAX has hit its lowest market cap since October 2021.

Stablecoin restaking has also become a popular trend, with players like ResolvUSD’s USR and levelUSD’s lvlUSD.

Hybrid stablecoins have also emerged, notably with the success of Ethena’s USDe and the protocol’s many partnerships:

• The latest is with Securitize and the launch of the Converge chain,
• A strategic partnership with World Liberty Finance, the project of U.S. President Donald Trump,
• Other stablecoins like Usual with their USD0 token.

The aim of this report is to understand how AAVE’s native stablecoin, GHO, fits into the competitive and fast-moving stablecoin landscape—now considered one of the most promising gateways for crypto adoption worldwide.

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The Three Forms of GHO and Their Characteristics

Since GHO’s launch by Aave, nearly 70% of the circulating supply is currently held in the Safety Module (GHO staking on the Aave interface). So it makes sense to start with this form of GHO.

stkGHO

stkGHO is part of the Safety Module, a feature temporarily implemented until the arrival of the Umbrella upgrade. So far, 3 assets can be staked in the Safety Module:

• stkAAVE
• stkABPT
• stkGHO

The staked assets serve as liquidity for the protocol in the event of bad liquidations or hacks. If an incident were to affect Aave users, a governance vote could be triggered to use the staked assets to cover losses.

In return for these risks, stakers of these 3 assets receive rewards in the form of interest on their deposits. Thus far, GHO stakers have received two sources of yield:

• AAVE emissions distributed between the three assets and the Merit Program (a sort of perpetual airdrop for protocol users)
• A $12 million annual allocation to the Merit Program since its launch.

anti-GHO

anti-GHO is a non-transferable ERC-20 token that will be implemented shortly after the Umbrella upgrade goes live (once audits are finalized). anti-GHO will have two main functions:

• It can be burned to repay GHO debt 1:1,
• It can be converted to stkGHO to earn yield from the Merit Program and other Aave protocol incentives.

This token aims to reward AAVE and stkBPT stakers with revenues generated from GHO’s usage in the protocol. In total, 50% of revenues generated by GHO will be allocated to stakers—80% to AAVE stakers and 20% to stkBPT stakers—distributed in the form of anti-GHO.

Assuming a total circulating GHO supply of around $200 million and an annual interest rate of 6.45%, this would generate $12.9 million in revenue, with 50% allocated to AAVE and stkBPT stakers.

Assuming that 20% of all AAVE tokens are staked, the estimated annual return in anti-GHO for stakers is around 1%. That’s based on $5.16 million in anti-GHO revenue and $516 million worth of staked AAVE at the time of writing. This estimate does not account for a potential increase in GHO’s circulating supply due to the introduction of sGHO and the AAVE Savings Rate.

sGHO

sGHO is a new reward mechanism introduced through a governance vote on AAVE’s forum. The goal is to provide an alternative yield source to stkGHO, offering lower returns but with increased liquidity and minimal risk.

The objective for the launch is simple: increase GHO’s circulating supply from $200 million to $300 million.

With stkGHO, users accept slashing risk in case of bad debt from GHO borrowing. With sGHO, users are not exposed to this risk.

The yield on GHO in the AAVE Savings Rate smart contract comes from protocol revenue and financial incentives set by the DAO. From day one, the goal of sGHO is to be attractive to investors.

Thus, AAVE Chan Initiative proposed a yield rate between 6% and 10% to stay competitive with the Sky Savings Rate (Maker’s product) and the yield on USDS deposited into AAVE, providing an attractive product via a premium yield.

sGHO cannot be used as collateral or deployed elsewhere. It’s also important to note that the circulating supply of sGHO will be capped at launch to minimize protocol risk.

After a vote by AAVE, stkAAVE, and stkBPT holders, the AAVE Savings Rate implementation received strong support from the community. The next step is the ARFC (AAVE Request for Comment), which will outline the technical details of sGHO and how its yield will be managed.

Conclusion

AAVE started 2025 with strong momentum through multiple protocol updates—especially around its native stablecoin, GHO. Between the changes to the Safety Module, new interest mechanisms for AAVE stakers, and the launch of the AAVE Savings Rate, the protocol is expanding its influence in the crypto market.

However, some questions remain unanswered and are worth raising:

• With a boosted yield for sGHO at its launch, stkGHO will still offer higher returns but comes with slashing risk. Will the product remain attractive enough for investors to increase the supply from $200M to $300M?
• With the emergence of players like BlackRock, World Liberty Financial, and Ethena, will GHO remain competitive?
• How long can competitive interest rates for sGHO be maintained to attract liquidity into the protocol?

One thing is certain: AAVE is no longer just a lending and borrowing protocol. The stablecoin sector is drawing increasing attention, and AAVE wants to be a major player in this trend.

The goal of reaching $300 million in circulating supply would make GHO the 15th largest stablecoin by market cap, and the 10th among decentralized stablecoins. AAVE’s ambitions for GHO stem from its profitability.

According to Marc Zeller, founder of AAVE Chan Initiative, the revenue from 1 GHO borrowed on the protocol equals that of 10 USDC. Thus, increased adoption of the stablecoin would make the protocol even more profitable and enable further initiatives and new financial incentives.