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Everything you need to know about blockchain central banks

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  • The stablecoin GHO by Aave is yet to be released and is the first overcollateralized stablecoin similar to MakerDAO’s DAI.
  • Researchers at Jarvis Labs believe that highly liquid stablecoins, automated market makers, and lending markets make up the sacred trinity of DeFi.
  • Following regulatory guidelines, DeFi protocols may be heading towards similar practices such as central banks.

Despite Terra’s LUNC (formerly LUNA) and UST’s $41 billion implosion, Stablecoins are gaining traction in the DeFi community. DeFi protocols with substantial liquidity, automated market makers, and lending markets are key to the next generation of stablecoins.

Also read: Ethereum’s dominance over Bitcoin is coming to an end.

The Holy Trinity of Stablecoins and What’s Next

Terraform Labs infamous founder Do Kwon promised: usa The owner that the algorithmic stablecoin will eventually destroy its main competitor, DAI. Integrated stablecoins power DeFi applications and blockchain-based games. After implosion of the UST, DAI is alive and well.

Analysts at Jarvis Labs argue that a well-liquidity DeFi protocol, automated market makers, and a lending market product seen as a holy trinity will allow for a “steady” release, subject to regulatory guidance. stablecoin.

Aave, an open-source liquidity protocol, recently released a technical paper on its own stablecoin (GHO). Users can borrow (or mint) GHO by providing extra collateral to the Aave protocol. The collateral is in the form of various cryptocurrencies, and Aave plans to maintain solvency by liquidating the collateral once the value of the borrower’s collateral drops to a certain level.

During the course of the loan, the interest paid by the user will be sent to the treasury of the protocol. The GHO stablecoin has not yet been released.

Jarvis Lab analysts believe it uses a proprietary DeFi protocol. stablecoin It will be the ultimate protocol. Aave’s most obvious competitors are Compound, Curve, Frax, Maker, and Uniswap.

Now that Aave is about to launch GHO, it is clear that the stablecoin arms race is starting to heat up. The competition is about to become quite revolutionary as the DeFi protocol prepares to act as a central bank, MakerDAO’s DAI stablecoin works similarly to a bank, so Aave’s GHO is expected to follow in its footsteps.

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