Aave’s decentralized stablecoin GHO is a game-changer, and Range Protocol is here to help you maximize your yield with it. But first, let’s understand exactly what GHO is?
What is GHO?
GHO is an overcollateralized decentralized dollar-pegged stablecoin native to the Aave Protocol. Overcollateralized assets like GHO maintain reserves in several other crypto assets, with the reserve’s value exceeding the stablecoin’s value in circulation to account for market volatility. Given Aave’s status as a leading decentralized lending protocol spanning multiple blockchain networks, GHO is strategically positioned to establish itself as a widely adopted stablecoin within all of DeFi.
Range’s GHO-USDC Vault
Range has launched its GHO-USDC Vault that aims to maximize GHO-USDC trading fee yield while also bootstrapping deeper liquidity for future use cases of GHO. The vault is on top of Uniswap V3 on Ethereum and the position will be managed by our experienced vault managers. LPs will only need to deposit USDC to participate in this vault and our vault managers will handle the rest.
The vault’s security has been audited by our experienced auditing partners at Veridise. You can find the full smart contract audit here: https://github.com/Range-Protocol/Range-GHO-Vault/blob/main/audits/Veridise-Audit-GHO.pdf
LPs of the vault will get exposure to the following streams of yield:
1. Lending yield on Aave.
2. Trading fees from Uniswap pool.
3. Incentives in Aave token.
In the future, as use cases for GHO develop, LPs will also get access to yields from arbitrage opportunities when GHO diverts away from peg.
Range’s GHO-USDC Vault consists of the following functions.
Liquidity Providers (LPs)
- Mint (Deposit USDC)
- Burn (Withdraw USDC)
- Supply Collateral
- Withdraw Collateral
- Mint GHO
- Burn GHO
Liquidity Providers (LPs)
Mint (Deposit USDC)
“Mint” occurs when an LP deposits USDC into the vault contract, which, in turn, mints vault shares representing their ownership in the vault. The number of shares minted depends on the ratio between the user’s USDC deposit and the vault’s underlying balance, converted to USDC.
The deposited USDC remains idle in the vault contract until the manager deploys it to the Uniswap pool. Minting is restricted when the GHO price from Uniswap and the Chainlink Oracle deviates by more than 0.5% to protect against the attack vectors involving pool price.
Burn (Withdraw USDC)
LPs can “Burn” vault shares to redeem their share of the USDC balance in the vault. The vault holds both GHO and USDC, but withdrawals are only in USDC. The vault manager monitors the vault’s passive USDC balance to ensure there’s enough liquidity for withdrawals. Temporary withdrawal restrictions may occur due to low passive USDC balance, requiring manager intervention to increase it by swapping GHO for USDC with the “Swap” function or repaying GHO debt on Aave with the “Burn GHO” and “Withdraw collateral” functions.
We will launch an incentive campaign where LPs can stake their LP Tokens through the stake widget on app page to earn AAVE incentives.
The “swap” function within the vault contract, allows vault managers to add passive USDC by exchanging it with GHO.
This is a manager only action that supplies USDC balance deposited by users via the “Mint” function to Aave as collateral. This provides collateral to Aave for collateralized debt position. The vault manager will only supply a certain percentage of passive USDC balance to Aave.
This is a manager-only action that withdraws USDC collateral from Aave when either all of the GHO debt has been repaid or when the post-withdrawal health factor of the Aave position remains above the threshold health factor. The manager is responsible for withdrawing only the amount of USDC collateral that does not pose a liquidation risk by maintaining a buffer between the health factor and the liquidation threshold.
This is a manager-only action that mints GHO tokens as debt against the deposited collateral on Aave. It creates a collateralized debt position on Aave, and the amount of GHO that can be borrowed or minted is restricted by the health factor. The Aave position is liquidated if the health factor drops below 1. The manager bears the responsibility of minting only the amount of GHO that does not pose a liquidation risk.
This is a manager-only action that involves burning GHO tokens to repay the debt of a collateralized debt position on Aave. When the manager burns GHO, it frees up the vault’s USDC collateral on Aave for improving the position’s health factor or to withdraw USDC collateral to vault to increase passive USDC balance
The Range team is extremely excited about the potential of GHO and are committed to further developing the GHO ecosystem. Be sure to follow us on Twitter to get more updates and try out our new GHO Liquidity vault at: https://app.rangeprotocol.com/gho