CoinDesk Report:
By Vince Quill, CoinTelegraph; Translation by Baishui
Following a vote by Aave’s decentralized autonomous organization (DAO), the GHO stablecoin has been deployed on the Arbitrum network.
Aave’s DAO plans to gradually introduce the GHO stablecoin on multiple networks over time, but opted to deploy it on Arbitrum to leverage the low transaction costs and higher throughput of Layer 2 networks.
The decision to phase the stablecoin rollout to other networks is based on security and risk management factors, enabling the DAO to test the waters before expanding GHO’s presence across other blockchain ecosystems.
Chainlink’s CCIP enabling multi-chain GHO
Chainlink’s CCIP protocol serves as an interoperability layer, allowing Aave DAO to migrate the initially Ethereum-based GHO stablecoin to Arbitrum and future networks.
High-level view of Chainlink’s CCIP interoperability protocol. Source: Chainlink
Stablecoin interoperability is facilitated through two mechanisms: the mint-and-burn model and the lock-and-release function, which involve locking or burning GHO tokens on the initial source chain and releasing them on the new chain.
When bridging GHO stablecoins from the Ethereum network to another blockchain, GHO tokens are locked in a smart contract on Ethereum (referred to as the “Vault contract”) and then minted by service providers on the target blockchain.
Conversely, when bridging GHO from another blockchain network to Ethereum, the equivalent tokens on the alternative chain are burned, releasing an equal amount from the Ethereum blockchain’s Vault contract.
If neither chain is Ethereum, service providers will burn GHO tokens from the first chain and mint new tokens on the second chain.
Chainlink and Arbitrum: Evolving Partnerships
The relationship between Chainlink and Arbitrum began in 2020 and has since evolved into a partnership aimed at fostering cross-chain development for decentralized applications.
Since then, Chainlink has emerged as a leading blockchain interoperability and oracle network, engaging in experimental pilot programs with global institutions like the SWIFT banking messaging system to facilitate cross-blockchain value transfers.
Building on this momentum, adoption and usage of Chainlink’s CCIP are set to increase in 2024, with cumulative network fee revenues reaching $377,724 in March, largely driven by activity on Arbitrum.
