Skip to main content

GHO Stability Module

Overview​

A Peg Stability Module (PSM) is a contract that enables the conversion of two tokens at a predetermined ratio. The GHO Stability Module (GSM) leverages the benefits of existing PSM models while innovating upon them in several ways to help further maintain GHO’s peg. The GSM is designed to facilitate conversions between GHO and governance-approved tokens, underpinned by a suite of features designed for flexible operations and risk management.

Key components include Price Strategies, Fee Strategies, support for ERC-4626 tokenized vault positions, freezes based on oracle Price Bounds, Exposure Caps, and Last Resort Liquidations.

This multifaceted approach underscores the GSM's role not just as a technical solution but as a strategic asset for peg maintenance and risk mitigation.

Deployed Contracts​

NameAddress
GSMRegistry0x167527DB01325408696326e3580cd8e55D99Dc1A
GSMFixedFeeStrategy0xD4478A76aCeA81D3768A0ACB6e38f25eEB6Eb1B5
GSMUSDC0x0d8eFfC11dF3F229AA1EA0509BC9DFa632A13578
GSMUSDT0x686F8D21520f4ecEc7ba577be08354F4d1EB8262
GSMUSDCFixedPriceStrategy0x430BEdcA5DfA6f94d1205Cb33AB4f008D0d9942a
GSMUSDTFixedPriceStrategy0x4c707764cbFB4FFa078e169e6b8A6AdbE7526a2c
GSMUSDCOracleSwapFreezer0xef6beCa8D9543eC007bceA835aF768B58F730C1f
GSMUSDTOracleSwapFreezer0x71381e6718b37C12155CB961Ca3D374A8BfFa0e5

Architecture​

Terminology: "exogenous" is used throughout this guide to refer to the non-GHO token in a module instance

GSMRegistry​

The GSMRegistry is a smart contract that stores a list of all GSM instances. This contract is owned by the Aave Governance Short Executor.

GSM​

Each token pairing in the stability module has a GSM or GSM4626 contract instance that acts as the GHO facilitator and entry-point for buy and sell functionality.

The GSM4626 contract is a special instance of the GSM that supports ERC-4626 tokenized vault shares as the exogenous token.

The parameters and periphery contracts that dictate module operations are detailed below:

Price Strategy​

The GSM introduces a flexible Price Strategy framework, enabling the module to adapt its pricing mechanism based on market conditions or strategic objectives. This system supports both fixed and dynamic pricing strategies, allowing for adjustments in response to real-time market data or predetermined conditions. The initial implementation focuses on a fixed 1:1 pricing strategy for simplicity and stability, with provisions for future adaptation to dynamic strategies as dictated by DAO governance.

Fee Strategy​

Each GSM instance has a FeeStrategy contract that determines a percentage fee for buy and sell conversions that is allocated to the Aave DAO treasury.

Exposure Cap​

The exposure cap is a parameter determined by Aave DAO Governance that sets the maximum amount of an exogenous token the stability module can hold.

Conversion Freezes and Oracle Price Bounds​

In case the price of the exogenous token deviates from a determined ratio, the freeze role can be utilized by the Aave DAO or assigned to an entity (autonomous agents or contracts) to respond and halt conversions.

An implementation of the freeze role is the OracleSwapFreezer contract. This contract utilizes Chainlink oracles and price bounds determined by Aave Governence to freeze/unfreeze based on oracle conditions.

Last Resort Liquidations​

In case of a rapid increase in risk in an exogenous token, the GSM features Last Resort Liquidations to liquidate the exogenous token. This contract role allows in the worst-case scenarios for the DAO to pause GSM functionality and liquidate the underlying balance of exogenous tokens.