This is an archive of our post on Aave governance forum. Read the full thread here.

LlamaRisk supports the deployment of the GHO Stability Module (GSM) on the Arbitrum network. As outlined in our recent research on GHO, the GSM plays an important role in maintaining GHO’s stability. This deployment on Arbitrum aligns with the goal of enhancing GHO’s stability and accessibility across multiple networks.

It is understood that the price strategy for the Arbitrum GSM will be a fixed 1:1 swap ratio between GHO and approved stablecoins (USDT, USDC), consistent with the existing Ethereum GSMs.

We support implementing low, non-zero mint and swap fees for the Arbitrum GSM, with a lower fee to encourage GHO minting and capital retention within the system. This approach manages exposure, prevents large fee-free swaps, ensures balanced GSM operations, and mitigates unwanted potential depletion of the GSM, such as large GHO mints via CoW Protocol swap routing observed with the Ethereum USDT GSM.

Lastly, regarding the funding of the GSM, we will await further information on the Facilitator on Ethereum that will mint GHO for use on Arbitrum.

This deployment represents an important step in expanding GHO’s ecosystem and enhancing its stability across networks. We will continue to monitor and provide updates as the implementation progresses.