Aave protocol’s GHO stablecoin now live on Arbitrum

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The deployment of the GHO stablecoin on the Ethereum layer-2 network will leverage Chainlink’s CCIP interoperability protocol.

Aave protocol’s GHO stablecoin now live on Arbitrum

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Following a vote from the Aave decentralized autonomous organization (DAO), a member-controlled community that proposes and manages changes to the lending protocol, the GHO stablecoin has been deployed on the Arbitrum network.

Aave’s DAO also plans to launch the GHO stablecoin on multiple networks over time but chose to deploy GHO on Arbitrum to take advantage of the layer-2 network’s low transaction costs and increased throughput.

The decision to roll out the stablecoin to additional networks in phases was based on security and risk management factors. This allowed the DAO to test the waters before expanding GHO’s presence to other blockchain ecosystems.

Chainlink’s CCIP makes multi-chain GHO possible

Chainlink’s CCIP protocol is the interoperability layer that allows the Aave DAO to migrate the GHO stablecoin, initially launched on the Ethereum network, to Arbitrum and other networks in the future.

A high-level view of Chainlink’s CCIP interoperability protocol at work. Source: Chainlink

The stablecoin interoperability is achieved through two mechanisms known as the burn-and-mint model and a lock-and-release function that locks or burns GHO tokens on the initial source chain and then releases them on the new chain.

Related: Chainlink data streams go live on Avalanche Network

If the GHO stablecoins are bridged from the Ethereum network to a different blockchain, the GHO tokens are locked in a smart contract, known as the “Vault Contract,” on Ethereum and then minted by a facilitator on the target blockchain.

When GHO is bridged from another blockchain network to the Ethereum network, the GHO tokens on the alternative chain are burned, and the equivalent amount is released from the Vault Contract on the Ethereum blockchain network.

If neither chain is Ethereum, a facilitator will burn the GHO tokens on the first chain and mint new ones on the second chain.

Chainlink and Arbitrum: A growing partnership

The relationship between Chainlink and Arbitrum began in 2020 and later morphed into a collaborative partnership to foster cross-chain development of decentralized applications.

Since that time, Chainlink has established itself as one of the leading blockchain interoperability and oracle networks, conducting experimental pilot programs to shift value across blockchains with global institutions like the SWIFT interbank messaging system.

Building on this momentum, Chainlink’s CCIP continued to see increased use and adoption in 2024, with cumulative revenues from network fees climbing to $377,724 in March, primarily driven by activity on Arbitrum.

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