Aave DAO approves staking initiative and plans to improve GHO’s peg stability

The Aave DAO approved a staking initiative that will see it run nodes directly and spread out its staking exposure.

The proposal, called Frontier, will see Aave Chan Initiative run validator nodes on behalf of the DAO. This will be to provide additional income and diversify its staking strategy. This is in addition to simply holding liquid staking tokens that provide a similar return.

ACI has partnered with liquid staking platform Stader to acquire SD tokens that will be used to operate 32 Stader minipools of four ETH each.

"Frontier represents a significant leap forward for Aave DAO,” said Marc Zeller, founder of ACI. “By taking the proactive step to run nodes and expand our staking strategy, we're not just increasing our alignment with the Ethereum network — we're also setting a precedent for DAOs everywhere.”

Improving safety and stability for GHO

The Aave DAO has also approved a number of protocol updates related to the ecosystem’s stablecoin GHO.

This will see the introduction of a safety module for GHO within the Aave DAO’s own safety module. This is aimed at mitigating risks involved with the stablecoin.

“The GHO Safety Module is a strategic move that bolsters the Aave Protocol's resilience by adding a stablecoin asset, which is inherently less volatile than AAVE. This diversifies the Safety Module's capacity to absorb shocks from various risk vectors in case of shortfall events,” ACI noted in a statement.

Those staking GHO with the safety module will receive AAVE tokens as a result of this at the rate of 50 AAVE per day.

Beyond this, the DAO is implementing a GHO stability module. This is a mechanism designed to help the stablecoin keep its peg. This will be deployed following a DAO vote starting on Jan 25.

The stability module will also result in an additional revenue stream for the Aave DAO, according to ACI.

"These upgrades are a testament to our commitment to constant improvement for the Aave protocol,” said Zeller. “We believe they will significantly enhance the utility of GHO, and contribute to a more stable, secure, and efficient Aave ecosystem."