You open a lending app to borrow dollars against your crypto, and several dollar stablecoins sit in the same list at nearly the same price. Some are issued by a company holding reserve assets and lent out only after other users deposit them, while one is created by the protocol itself and lent from its own supply.
On Aave, that difference separates GHO from USDT and USDC: GHO is Aave's own stablecoin, minted by a contract that governance controls and lent from the pool against collateral. USDT and USDC are issued by Tether and Circle outside the protocol, then listed as reserves in the shared-pool model behind Aave lending. That origin decides how supply grows, who sets your borrow rate, and who collects your interest.
What is the difference between GHO, USDT, and USDC on Aave?
GHO is minted by a governance-controlled contract and placed in the Aave pool before anyone borrows it, so a GHO loan draws tokens that already exist. USDT and USDC are issued by Tether and Circle outside Aave and reach the pool through user deposits, and in both cases a borrow moves existing tokens and leaves total supply unchanged.
GHO is a decentralized, overcollateralized stablecoin native to Aave, built to hold a value pegged to the US dollar. Overcollateralized means the collateral behind the loans is worth more than the GHO issued against it, which gives the system a buffer when collateral prices fall. Aave Governance controls key settings such as its interest rate and its collateral requirements (source: Aave Help, GHO Stablecoin). You get GHO by borrowing it against your collateral or by swapping USDC or USDT for it at 1:1 (source: Aave, GHO).
USDC and USDT start life away from the protocol, where Circle mints new USDC when a business deposits US dollars into its Circle account and burns it when that business redeems. Each USDC is backed one for one by cash and cash-equivalent holdings and can be exchanged for US dollars at 1:1 (source: Circle, USDC). Tether creates new USDT only when customers who have passed its know-your-customer (KYC) checks request and pay for them. Each token is pegged 1-to-1 to the dollar and backed by Tether's reserves (source: Tether, How It Works).
Once they arrive on Aave, those tokens become reserves, and a reserve is one token's pool inside an Aave market, governed by its own risk parameters. The same token can carry different parameters in different markets (source: Aave Docs, Reserve). Suppliers deposit into the reserve to earn interest while borrowers take that liquidity against their own collateral (source: Aave Docs, Liquidity Pool). GHO on the Aave V3 Ethereum Core market sits in the same kind of pool with one difference: ordinary users cannot supply it (source: BGD Labs, Aave v3.4 features). Since the v3.4 upgrade, its only supplier is a minter contract under governance control that mints GHO into the pool ahead of borrowers (source: Aave Governance Forum, ARFC BGD Aave v3.4).
Aave V3 and Aave V4 both run live markets today. Aave V4 went live on Ethereum on March 30, 2026, with a Hub and Spoke design. A central Liquidity Hub holds supplied assets, and connected Spokes lend them out under their own collateral types and risk parameters (source: Aave Labs, Aave V4 is Live on Ethereum).
How GHO supply on Aave differs from USDT and USDC
GHO enters the Aave V3 Ethereum Core market when a governance-run minter creates it and deposits it in the pool, ahead of any borrower. USDT and USDC enter only when holders deposit tokens they already own, and borrowing any of the three then works the same way: you take tokens from the pool, and total supply stays put.
Borrowing GHO works like borrowing any other Aave asset (source: BGD Labs, Aave v3.4 features). Once you have supplied enough eligible collateral, you can borrow GHO up to the collateral factor that your assets allow (source: Aave Docs, GHO). The minter contract adds GHO to the pool or withdraws and burns it only when a permissioned caller acts, by default governance and optionally a party such as the GHO stewards. The reserve's maximum exposure is set by the minter's capacity and the GHO borrow cap (source: Aave DAO, GhoDirectMinter). On top of your collateral, two limits therefore apply to your loan: the borrow cap and the GHO sitting idle in the pool.
Closing the loan follows the usual borrow steps: you supply collateral, borrow GHO, then repay the GHO you owe together with the interest that accrued in real time (source: Aave, GHO). GHO itself is an ERC-20 token on Ethereum (source: Aave Docs, GHO). ERC-20 is the Ethereum standard for fungible tokens; every unit is identical to every other unit and moves between accounts like any other Ethereum token (source: ethereum.org, ERC-20 Token Standard). That is why the coins in your wallet carry no link to your debt once you send them away, and why only a repayment to the pool reduces what you owe. Repaid GHO goes back into the pool for the next borrower, as with any other listed asset (source: BGD Labs, Aave v3.4 features).
A USDC or USDT supply follows the shared-pool model, so when you supply, your tokens move into the Aave liquidity pool and start accruing interest at the market's supply rate. You can withdraw them with that interest as long as the reserve holds enough unborrowed liquidity (source: Aave Docs, Liquidity Pool). That withdrawal condition is the practical difference for a supplier, because a heavily borrowed USDC reserve can make you wait for repayments or new deposits before your tokens come back.
The useful check before borrowing is therefore similar on both sides: the amount available to borrow in that reserve, and for GHO also how close total GHO borrowing sits to the borrow cap.
GHO facilitators and mint caps
A facilitator is a contract or protocol that Aave Governance authorizes to mint and burn GHO up to a set capacity. Each one can only create as much GHO as governance has assigned to it, and on Aave's own markets it mints ahead of demand. USDT and USDC have no facilitators on Aave, because Tether and Circle control their supply.
Among the facilitators that now put GHO into circulation, direct minters deposit it ahead of time into Aave markets on Ethereum, first on Prime and since v3.4 on Core, where borrowers draw it as debt (source: Aave Governance Forum, ARFC BGD Aave v3.4). The Stability Modules are funded through the RemoteGSM design, in which one facilitator per network mints GHO into a shared GHO reserve that then supplies any number of modules (source: Aave Governance Forum, RemoteGSM Upgrade). Each facilitator needs approval from Aave Governance, which also assigns it a capacity, meaning the amount of GHO that facilitator is allowed to mint (source: Aave Help, Facilitators).
That capacity is enforced inside the GHO token contract, where each facilitator has a capacity and a current level, a mint call fails if it would push the level above the capacity, and a burn lowers the level by the amount burned. Governance can change a capacity with one parameter update; a facilitator can only be removed after everything it minted has been burned (source: Aave Docs, GHO).
The Flashmint facilitator works differently from the others, because every flash mint is created and returned inside a single transaction, so no GHO stays outstanding against it, and its cap applies to each transaction separately. Flash mints serve liquidations, debt switches and peg arbitrage (source: Aave Docs, GHO). Peg arbitrage here means buying GHO below a dollar or selling it above a dollar until the market price moves back toward one dollar.
For a borrower, the facilitator model explains two things about GHO supply: it grows when governance or the stewards mint more into a market, and borrowing demand alone does not create new tokens. When the pool runs low, a new GHO loan has to wait for repayments or for the minter to add more, up to its capacity.
How GHO, USDT, and USDC borrow rates are set
Aave Governance and the GHO Stewards set the GHO borrow rate directly, as a flat rate that does not follow reserve utilization. USDT and USDC borrow rates move with utilization, the share of a reserve's supplied tokens that are currently borrowed, so those rates rise as a reserve fills up and fall again as borrowers repay.
Since v3.4 the Core GHO rate has been static, with no link to utilization; only governance votes or steward adjustments change it (source: Aave Governance Forum, ARFC BGD Aave v3.4). Other reserves price their loans from their own supply and borrow balances (source: Aave Docs, Reserve). The Aave DAO (decentralized autonomous organization) manages GHO's supply, its interest rates and its risk parameters. Aave positions the GHO borrow rate as a fixed rate below the cost of borrowing USDC or USDT under the current parameters (source: Aave, GHO). A governance vote can change that gap, and you should read the current GHO rate in the app before you borrow.
Ordinary reserves price borrowing from demand, since each reserve has an interest rate model with a base rate and slopes that set how quickly the rate climbs as utilization rises. The rate goes up as more of the reserve is borrowed, so the reserve keeps spare liquidity for withdrawals and for liquidations. Those parameters also differ between markets, so USDC on one network can carry a different rate and different caps from USDC on another. Governance proposals can change them by vote (source: Aave Docs, Reserve). Because each reserve sets its own curve, the borrow rate is the first number to compare when you weigh Aave against Compound for the same stablecoin.
In practice, a USDC borrow can become more expensive while you hold it if other users borrow heavily from the same reserve. The GHO rate moves only when governance, or the stewards it has delegated limited powers to, decides to change it. That makes the cost of a GHO loan easier to forecast over a few weeks and the cost of a USDC loan more sensitive to market demand.
The fair way to choose is to read both rates in the same market on the same day. A GHO rate from last month placed next to today's USDC rate tells you little about either, because both can move. Also check which version you are using, since a V3 market and a V4 Spoke can list the same token with different parameters, and the rate on one says nothing reliable about the rate on the other.
Where the interest on GHO, USDT, and USDC borrows goes
Interest you pay on a GHO borrow goes to the Aave DAO treasury, because the DAO's minter supplied it. Interest on a USDT or USDC borrow goes mainly to the suppliers of that reserve, who receive it as their supply rate. The same kind of payment funds the protocol in one case and other users in the other.
GHO borrowers pay their interest straight into the Aave DAO treasury, which supports the protocol and its governance (source: Aave Help, GHO Stablecoin). On Ethereum Core all of it reaches the treasury through a 100% reserve factor, the share of borrow interest a reserve keeps for the protocol (source: BGD Labs, Aave v3.4 features). The treasury is controlled by Aave Governance, so the GHO interest you pay ends up in a fund that token holders direct through votes.
On a USDC or USDT reserve, suppliers earn interest in exchange for providing the liquidity that borrowers use. Their supply rate depends on the reserve's utilization and on governance parameters (source: Aave Docs, Liquidity Pool). When you borrow USDC on Aave, part of your interest becomes income for the users who supplied it, so heavy borrowing demand rewards suppliers directly.
GHO holders earn through the sGHO savings token, Aave's onchain savings token for GHO: you deposit GHO, receive sGHO in one transaction, and earn a savings rate paid in GHO that Aave governance sets, with no lockup and no minimum. That yield comes from GHO borrower interest and from the stablecoin reserves that back GHO, which are held as yield-earning Aave tokens (source: Aave, GHO).
The two routes to dollar yield therefore depend on different forces: supplying USDC or USDT pays you a share of what borrowers pay for that token, so your rate rises and falls with demand for it. Holding sGHO pays you a rate that governance chooses, so your rate changes when a vote changes it. Both routes expose you to smart contract risk and to the peg risk every stablecoin carries.
How the GHO Stability Module ties the three stablecoins together
The GHO Stability Module (GSM) lets you swap USDC or USDT for GHO, and back again, at a fixed 1:1 price that governance controls. It is the main link between the three tokens on Aave, because the swap hands you GHO without opening a loan and keeps the USDC or USDT you paid inside the module.
The GSM builds on the peg stability module (PSM), a contract that converts two tokens at a predetermined ratio, and it converts GHO against tokens that governance has approved. Its first pricing strategy is a fixed 1:1 rate chosen for simplicity and stability. The framework also lets governance move to dynamic pricing later (source: Aave Help, Stability Module).
USDC and USDT each have their own GSM contract on Ethereum, each with a fee strategy that charges a percentage on buys and sells and sends that fee to the Aave DAO treasury (source: Aave Docs, GHO). Because governance and its stewards can adjust that fee, check the current figure in the swap screen before you convert. You can reach the module through trading apps that have integrated it, such as CoW Swap (source: Aave Help, Facilitators).
Swapping through the GSM gives you GHO with no collateral, no Health Factor (the safety ratio Aave uses to decide when a loan can be liquidated), and no borrow interest, because you paid for it with another stablecoin. The USDC or USDT you paid stays in the module behind your GHO. That GHO was minted earlier into the shared reserve that funds the module (source: Aave Governance Forum, RemoteGSM Upgrade). Across the system, the crypto Aave holds behind GHO is worth more than the GHO in circulation (source: Aave, GHO).
The module also works in the other direction, which matters for the peg. When GHO trades below a dollar elsewhere, you can buy it cheaply and swap it back for USDC or USDT at 1:1, and that buying pressure pushes the market price up. When GHO trades above a dollar, you can swap stablecoins in at 1:1 and sell that GHO, which pushes the price down. Those trades only work while the module holds enough USDC or USDT and conversions stay open.
Borrowing GHO vs USDC with the same collateral
With the same ETH collateral, a GHO borrow and a USDC borrow use the same borrowing power and the same Health Factor rules. They differ in what happens around the loan: the GHO borrow draws from a pool only the DAO's minter supplies, at a flat rate, while the USDC borrow takes other users' deposits at a utilization-driven rate.
Suppose you supply ETH worth $5,000 to the Aave V3 Ethereum market at an assumed 75% loan-to-value (LTV) ratio, which caps your borrowing at 75% of the collateral's value (source: Aave Docs, Reserve). Your borrowing power is $3,750, and you want $2,000 of stablecoins, which uses a little over half of it. The amount and the LTV here are an example, so read the real LTV for your collateral on the market screen.
If you borrow 2,000 GHO, 2,000 GHO leave the Core GHO reserve for your wallet. The minter created those tokens before you arrived, which is why GHO's total supply does not change. You owe 2,000 GHO plus interest at the flat rate that governance and its stewards set (source: Aave Governance Forum, ARFC BGD Aave v3.4). No USDC or USDT reserve changes, and no other user's deposit was lent to you.
If you borrow 2,000 USDC instead, 2,000 existing USDC leave the USDC reserve for your wallet. Circle's circulating supply stays the same, the reserve's utilization rises, and your rate floats with that utilization, so a surge in other borrowing can raise your cost while the loan is open. The interest you pay on that loan goes to the suppliers of the USDC reserve.
The common mistake on the GHO side is treating the tokens as the loan. If you send the 2,000 GHO to another wallet or sell it, your debt stays open and keeps accruing interest, and if ETH falls far enough your Health Factor drops toward 1 and the position can be liquidated. Only a repayment of GHO to the pool closes the loan and frees your ETH.
A third option sits between the two when you already hold 2,000 USDC, because you can skip the loan and swap it for GHO in the Stability Module at 1:1, minus any fee. That gives you GHO with no debt and no Health Factor, drawn from the reserve that funds the module, while your USDC stays in the module. The trade-off is that your USDC is gone from your wallet, so this route suits you only when you want to hold GHO and not to borrow against your ETH.
Trading AAVE and dollar stablecoins on BloFin
AAVE is the governance token of the Aave Protocol, and its holders vote on parameter changes such as the GHO borrow rate and the capacity of each facilitator. If your next step is trading the token behind those decisions, or switching between USDT and USDC, BloFin lists markets for both.
AAVE holders and holders of staked AAVE can vote directly or hand their votes to a delegate. Those votes decide protocol deployments, parameter adjustments, new features and more (source: Aave Docs, AAVE Token). That makes the AAVE token the asset most directly tied to how GHO is run, while GHO, USDT, and USDC are the dollar tokens you actually borrow and repay.
On BloFin, AAVE/USDT Spot lets you buy and sell the token itself, and the AAVEUSDT Perpetual is a USDT-margined contract that tracks the AAVE price without delivering the token. A spot purchase puts AAVE in your BloFin account, while a perpetual position gives you price exposure only, which is the core difference between spot and perpetual futures. For USDT and USDC themselves, USDC/USDT Spot lets you convert one into the other on an order book.
None of these markets opens an Aave position, so your Health Factor, any GHO debt and any USDC or USDT supply stay on Aave while a BloFin balance remains a separate holding on an exchange account. Keep the two apart when you plan, so that a trade on the exchange is never mistaken for a repayment on the protocol.
Trading fees on AAVE/USDT Spot, the AAVEUSDT Perpetual, and USDC/USDT Spot depend on your account tier, and you can check the current maker and taker rates for each market on the BloFin fee schedule before you place an order.
GHO vs USDT and USDC side by side
The three tokens differ on Aave in the ways that change your decision: how new supply appears, who sets the borrow rate, who earns the interest, what limits a borrow, and what backs the dollar value. GHO answers each question through Aave governance, while USDT and USDC answer the supply and backing questions through their issuers.
| Question | GHO on Aave | USDT and USDC on Aave |
|---|---|---|
| How new supply appears | Minted ahead of demand by governance-approved facilitators into Aave markets and the Stability Module reserve | Issued by Tether or Circle outside Aave, then supplied into a reserve by holders |
| What a borrow does | Draws pre-minted GHO from the pool and records your debt; total supply is unchanged | Moves existing tokens out of the reserve and records your debt |
| Who sets the borrow rate | Aave Governance and the GHO Stewards, as a flat rate | The reserve's interest rate model, driven by utilization |
| Who earns the interest | The Aave DAO treasury | Suppliers to that reserve |
| What limits a borrow | The GHO borrow cap, the GHO available in the pool, and your collateral | The reserve's available liquidity and your collateral |
| What backs the dollar value | Overcollateralized loans and stablecoin reserves in the Stability Module | Issuer reserves held by Circle or Tether |
| How holders earn yield | Deposit into sGHO at a governance-set savings rate | Supply to the reserve at a utilization-driven rate |
Choose a GHO borrow when you want a rate that changes only through governance and its stewards and you accept that your interest funds the Aave DAO. Choose a USDC or USDT borrow when that reserve's current rate is lower than the GHO rate and you expect utilization to stay calm, or when you need that exact token for a payment or for another protocol. Swap into GHO through the Stability Module when you already hold USDC or USDT and want GHO without debt.
When your goal is yield, the choice is between supplying USDC or USDT, which pays you from borrower demand, and depositing GHO into sGHO, which pays a savings rate set by vote. Whichever token you pick, check the live rate, the amount available to borrow, and your Health Factor in the same market before you sign the transaction.
Looking to trade AAVE tokens on BloFin? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, then open the AAVE/USDT Spot trading page or the AAVEUSDT Perpetual page. To switch between USDT and USDC, open the USDC/USDT Spot trading page.
Frequently asked questions
Can you turn USDC or USDT into US dollars on Aave?
Aave has no step that turns USDC or USDT into bank dollars. Inside the protocol you can supply either token to earn interest, use it as collateral where that market allows it, borrow it against other assets, or withdraw it (source: Aave Docs, Liquidity Pool). You can also exchange it for GHO through the GSM, and each of those actions leaves you holding a token. Cashing a stablecoin out to a bank account happens off the protocol, so plan that step separately from any open Aave position.
Who can change the GHO borrow rate between governance votes?
GHO Stewards can adjust the GHO borrow rate within limits governance has set. They may act when GHO's 30-day average price leaves a $0.995 to $1.005 band, moving the rate at most 5 percentage points every two days, up to a 25% annual percentage rate (APR). Members from Aave's service providers act through a multisig wallet, a shared account that needs several signers to approve each transaction (source: Aave Docs, GHO). In August 2026 the Risk Stewards were set to raise the Core rate in two steps, from 3.75% to 4.25%, with GHO near $1 (source: Aave Governance Forum, GHO Stewards August 2026 Update).
What happens to the Stability Module if USDC or USDT loses its peg?
The module can freeze conversions. A freeze role, held by the Aave DAO or assigned to an automated contract, can halt swaps when the USDC or USDT it holds drifts from its expected ratio, and the OracleSwapFreezer contract does this using Chainlink price feeds and price bounds set by governance. Governance also sets an exposure cap on how much of each stablecoin the module may hold. In the worst case, Last Resort Liquidations let the DAO pause the module and sell off its USDC or USDT balance (source: Aave Docs, GHO). The 1:1 swap is therefore a governance-managed service that can pause.
Is GHO available on networks other than Ethereum?
GHO is issued on Ethereum mainnet and reaches other networks through Chainlink's Cross-Chain Interoperability Protocol (CCIP), the messaging bridge that Aave Governance approved for moving GHO between chains. A transfer locks GHO on mainnet or burns it on another network at the source, and the destination releases it on mainnet or mints it elsewhere once the cross-chain message is validated. GHO is deployed on Arbitrum, Avalanche, Base, Gnosis, Mantle, Monad, Plasma, and X Layer (source: Aave Docs, GHO). Every copy on those networks traces back to GHO first created on Ethereum, which is why mainnet keeps the locked supply that backs bridged balances.
Does staking AAVE lower the cost of borrowing GHO?
The stkAAVE discount on GHO borrowing ended when Aave Governance executed the v3.4 upgrade on Ethereum on July 2, 2025, so staking AAVE no longer lowers the rate on a GHO loan. Any discount not yet applied to a position at that moment was lost. To reduce that loss, the Dolce Vita service was set to refresh the discount for discounted borrowers within 24 hours before execution, aiming to cut it to less than one day of discount accrual (source: Aave Governance, Upgrade Aave instances to v3.4).
What happens when a GHO borrow is liquidated?
A GHO borrow faces liquidation on the same terms as every other Aave loan. Once your Health Factor falls below 1, meaning your borrowed value exceeds your collateral weighted by its liquidation thresholds, any address can call the liquidation function on the pool. That call repays up to 100% of the GHO debt and gives the liquidator collateral of equal dollar value plus a liquidation bonus (source: Aave Docs, GHO). You keep the GHO you originally borrowed, but you lose collateral worth more than the debt that was repaid, which is the cost of letting the Health Factor fall that far.
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Primary sources include Aave Help on GHO, facilitators, and the Stability Module; Aave Docs on GHO, reserves, liquidity pools, and the AAVE token; Aave Governance records and steward updates on the v3.4 upgrade, GHO rates, and the RemoteGSM design; BGD Labs' v3.4 features and GhoDirectMinter documentation; Aave's GHO page; Aave Labs' V4 launch post; Circle on USDC; Tether on how USDT works; and ethereum.org's ERC-20 standard. All facts independently verified against cited documentation current as of October 2026.
This article is for informational and educational purposes only. It is not financial, investment, trading, or legal advice. Cryptocurrency can lose value. Borrowing on Aave can lead to liquidation if the health factor drops below 1. Spot AAVE/USDT buys the token. An AAVEUSDT Perpetual is a contract on the price. Do your own research. Consider your circumstances before using any protocol or trading any asset.