Aave , one of the foremost decentralized finance (DeFi) protocols, has announced plans to roll out a new savings product called sGHO aimed at providing GHO holders a compelling way to earn a yield. The low-risk offering will sit atop the GHO stablecoin, which, like its DeFi counterpart DAI, is collateralized in a way that ensures it retains its peg for the foreseeable future. The product offers low risk and high yield opportunities to users. The yield is based on two components: the native Aave lending rate and an incentivized rate derived from GHO borrow revenue (which we dive into more below). This new offering is expected to become the on-chain savings rate for Aave users, and particularly attracts new users to the Aave ecosystem who may be looking for simpler ways to participate in on-chain opportunities. What is sGHO and How Does it Work? sGHO is a new savings product that allows users to earn yield on their GHO holdings without the complexity of high-risk strategies often associated with DeFi products. GHO, Aave’s native stablecoin, will be the underlying asset of this savings product, which aims to attract users seeking a reliable and straightforward way to earn passive income. In contrast to a range of traditional savings products, sGHO will not impose any deposit or withdrawal fees, making it a choice for the cost-averse that live in the DeFi world. sGHO is a savings vehicle that allows users to participate in the Aave ecosystem (and the greater DeFi world) while earning yields and avoiding costs. Unlike the earlier Aave market, where users would have to manually manage their deposits and withdrawals and where the Aave team would have to set risk parameters for the Aave price oracle, Aave has now made checking off both boxes (cost-avoidance and earnings manifestations) and doing so in a customer-friendly way quite simple and quite safe. According to the Aave team, their latest product will unveil an on-chain savings rate pegged to a stable asset, and this savings rate will be much more user-friendly than existing alternatives. When it comes to DeFi, users typically find themselves facing strategies that require sophisticated levels of know-how and commitment. And under those circumstances, it’s hard to pin down any single user interface that’s intuitive and easy to use. In this context, sGHO could be seen as a front porch that invites users to come into the greater Aave ecosystem. Growth Expectations and Revenue Comparison The growth of sGHO is expected to be significant, according to Stani Kulechov, founder of Aave. Kulechov forecasts that sGHO could generate between $300 million and $500 million in outstanding GHO. For comparison, Kulechov said, “With GHO, the Aave DAO’s top-line revenue is already looking very good, and this is something that decentralized on-chain protocols need: stable, reliable, and transparent on-chain revenues. GHO is rewarding the Aave DAO as if it were a stablecoin. And it is almost a parallel money printer relative to the stablecoins that are with USDC for the Aave DAO.” (Kulechov, of course, is not objective.) GHO will not only provide a new way for Aave users to earn yield but also help to drive greater demand and adoption for GHO. By linking the stablecoin to the savings product and offering an attractive yield, Aave is positioning GHO as a core asset within its ecosystem, while also enhancing the appeal of the protocol to a wider range of users. Aave is proposing to create sGHO savings product by introducing Aave Savings Rate (ASR). sGHO is a new low-end risk profile savings product for earning yield on GHO based on native aave lending rate and incentivized rate collected partially from GHO borrow revenue. No withdrawal… — Stani.eth (@StaniKulechov) March 5, 2025 Aave’s Vision for the Future of On-Chain Savings Aave’s vision of a future with accessible and sustainable financial products on the blockchain pushes forward once more with the sGHO savings product. With this, Aave has now introduced a savings rate for users in the context of what DeFi protocols are doing more and more often these days: offering financial services that are simpler, clearer, and more tailored to the average user. In the introduction of sGHO, Aave takes on quite an uncontroversial and obviously beneficial role by providing users with a straightforward, low-risk structuring of their holdings that allows them to earn yield. Decentralized finance is gaining interest, and there’s a growing demand from the market for yield-bearing products. Why should that be a way to attract capital into Aave?” With the Aave sGHO product, we see this simple, low-risk, high-yield product that to me is a compelling option for both seasoned capital allocators and newcomers to DeFi. As far as what we’re calling corner solutions in DeFi, sGHO is one of those because it is serving a very basic function with much higher and better risk-reward dynamics than can be found in the bank. Aave is establishing a new benchmark for on-chain savings by providing a straightforward savings product devoid of the intricate details and dangers that usually come with DeFi. Instead of a savings account, you have sGHO; in lieu of an interest rate, you get a yield. As the DeFi ecosystem evolves, new products will inevitably help with the transition from traditional finance to this new world. sGHO is one such product. Conclusion Aave’s proposed sGHO savings product is an important new component in the DeFi space, offering users a way to earn yield on their GHO holdings that is as close to low-risk as seems possible in the DeFi ecosystem. With its straightforward structure, appealing returns, and the lack of any kind of fees, sGHO is a contender to become a Go-To savings product on Aave, an alternative to staked AAVE and a clear use case for GHO that touches upon the Federal Reserve’s prohibition on private stablecoins. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Image Source: leddamarita/ 123RF // Image Effects by Colorcinch
