Aave is recognized as one of DeFi’s pioneering protocols. Launched in 2018, it has evolved to support various Ethereum layer-2 solutions, including Base and Arbitrum, and introduced its algorithmic stablecoin GHO, akin to DAI.

On February 12, Aave proposed altering the method of gas fee payments to use GHO rather than ETH. This proposal aims to mitigate the instability of gas fees that fluctuate with supply and demand, thereby providing greater transaction cost predictability.

Aave Labs proposes a gas token framework for @GHO. Using GHO as a gas token enables predictable pricing for gas fees, particularly in low-fee networks. pic.twitter.com/6TZR2tW9VJ — Aave (@aave) February 12, 2025

Adoption of GHO for Gas Payments

In a post on X, Aave indicated that implementing a structured system for GHO users to pay gas fees with the stablecoin instead of ETH would stabilize costs. This transition will utilize their native bridge as a liquidity pool during GHO minting, addressing security concerns due to potential vulnerabilities in bridge systems. The security and liquidity management will be foundational to its infrastructure.

Lens Chain, a layer-2 Ethereum platform, is the first to adopt GHO as its native gas token—ideal for testing as it employs rollups to enhance transaction speeds and optimize costs.

Lens Chain will run on @GHO The first L2 with a stablecoin gas token. pic.twitter.com/8gFOeMwx3D — Lens Chain (@LC) February 12, 2025

This initiative will significantly benefit layer-2 platforms by ensuring that substituting gas fees from ETH to GHO will yield predictable transaction costs, even though gas fees are already low on these networks.

Additionally, recent data show that Aave has managed to facilitate over $20 billion in asset movements in the past year alone, reflecting its growth.

ICYMI: @aave added over $20 billion in net deposits in the past year. pic.twitter.com/ff5nRpyQTm — Token Terminal | We are hiring! (@tokenterminal) February 13, 2025

According to DeFiLlama, Aave currently manages over $19 billion in total value locked (TVL), predominantly on Ethereum.

Recent Movement by Ethereum Foundation

Recently, the Ethereum Foundation, which promotes Ethereum as a smart contract platform, transferred over 30,000 ETH to Aave, which will relieve some market pressure as ETH responds to recent price declines.

EF Treasury has deployed: – 10,000 ETH into Spark – 10,000 ETH into Aave Prime – 20,800 ETH into Aave Core – 4,200 ETH into Compound We’re grateful for the Ethereum security community that has worked tirelessly to enhance Ethereum DeFi! — Ethereum Foundation (@ethereumfndn) February 13, 2025

This deployment aims to stabilize ETH’s value, which has fluctuated below $3,000. The Ethereum Foundation has been criticized for exacerbating ETH’s price decline and is adapting its strategy to involve lending ETH and utilizing the yields for operational expenses instead.

Amidst all these developments, AAVE, the governance token for the protocol, is showing stable performance, supported at levels above $200, suggesting that while the trend is positive, buyer commitment is essential to offset recent losses. A clear breach above $275 might invigorate market sentiment and could push prices back to last year’s highs.

Key Takeaways

• Aave is pushing for a new framework for gas fee payments.
• Lens Chain will pioneer the use of GHO for gas fees.
• AAVE demonstrates stability, with a positive outlook on its price trend.

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