Aave’s native multi-collateralized stablecoin, GHO, has been deployed on the Arbitrum network after a vote by the Decentralized Autonomous Organization [DAO].

The member-controlled community picked Arbitrum to take advantage of the layer-2 network’s low transaction cost and high throughput.

With time, they are also looking to deploy the GHO stablecoin on other networks. This will, however, be done in phases keeping the risk management and security factors in mind.

The stablecoin is powered by Chainlink’s Cross-Chain Interoperability Protocol [CCIP]. GHO was initially issued on the Ethereum mainnet. With CCIP as the interoperability layer, it’s now migrated to Arbitrum and will likewise be integrated with other blockchains in the future.

Interoperability is achieved via two mechanisms: the burn-and-mint model and a lock-and-release function. As the name suggests, GHO tokens are locked or burned on the initial source chain and then released onto the new chain.

If the stables are bridged from Ethereum to a different network, the GHO tokens are locked in a vault contract on Ethereum and subsequently minted by a facilitator on the other blockchain.

Likewise, when the stablecoins are bridged from another network to Ethereum, the GHO tokens on the alternative chain are burned. It should be noted that an equal amount is also released from the vault contract on Ethereum.

GHO is already a borrowable asset in the Aave Arbitrum pool.

Commenting on the latest launch, Nina Rong, Head of Ecosystem Development at The Arbitrum Foundation said,

“This integration is poised to revolutionize accessibility, lower transaction costs, and unlock unprecedented liquidity. As decentralized finance continues to advance, we are looking forward to seeing more transformative new use cases across Arbitrum."