- Aave Labs proposes integrating BlackRock’s BUIDL with the GHO Stability Module.
- The update aims to enhance capital efficiency and expand real-world asset yield.
- BUIDL integration allows 1:1 USDC swaps, monthly dividends, and seamless transactions.
In a move to enhance its stablecoin system, Aave Labs has introduced a new temperature check proposal to update the GHO Stability Module (GSM). This update aims to integrate BUIDL, a tokenized fund managed by BlackRock, into the GSM infrastructure.
The proposal seeks to optimize capital efficiency and expand Aave’s yield sources by leveraging traditional financial assets through blockchain technology.
Optimizing GHO stability with BUIDL integration
The primary goal of Aave Labs’ proposal is to improve the capital efficiency of the GHO Stability Module (GSM) by integrating BlackRock’s BUIDL.
Currently, the GSM ensures the stability of Aave’s native stablecoin, GHO, by maintaining a 1:1 convertibility with another asset, typically USD Coin (USDC). However, in the existing system, surplus USDC often remains idle.
The proposed integration involves building a new instance of the GSM that supports external integrations and control mechanisms, specifically designed to incorporate BlackRock’s BUIDL, a tokenized fund deployed on the Ethereum network representing traditional financial assets like cash and US Treasury bills.
By utilizing surplus USDC to mint BUIDL tokens, the updated GSM aims to enhance its efficiency while maintaining the high standards of backing provided by USDC.
BUIDL offers several advantages, including on-chain access to traditional financial assets, managed by BlackRock Financial Management Inc., with BNY Mellon as custodian and PricewaterhouseCoopers LLP as the fund auditor.
Priced at $1 per token, BUIDL pays daily accrued dividends to holders in the form of new tokens each month. This structure allows holders to earn yield while maintaining flexibility in custody options and the ability to transfer tokens 24 hours, seven days a week throughout the year.
Future prospects and technical specifications of the integration
The integration of BUIDL into the GSM could open new avenues for Aave DAO, potentially expanding yield sources into real-world assets (RWAs) and strengthening partnership opportunities with BlackRock.
The proposal envisions enabling 1:1 fixed-ratio swaps…