When you borrow a dollar stablecoin in decentralized finance (DeFi), the coin in your wallet is only half of the deal. The other half is the loan behind it: who created the coin, what collateral backs your debt, which number triggers a sale of that collateral, and who votes on the rules.
Crypto-backed stablecoins all work the same broad way, since you lock collateral worth more than the loan and borrow newly created dollars against it. What separates them is who holds the collateral, who sets the limits, and how liquidations run.
Aave and its stablecoin GHO, set beside Maker, Spark, and DAI, show those differences clearly: GHO is minted inside Aave's own markets, DAI comes from the system MakerDAO built, and Spark runs a separate lending market on a copy of Aave's code.
What are Aave, GHO, Maker, Spark, and DAI?
Aave is a lending protocol where you supply crypto to earn interest or borrow against it, and GHO is the dollar stablecoin that Aave mints itself. DAI is the crypto-backed stablecoin created by MakerDAO, which now operates as Sky, and Spark is a Sky-linked protocol whose SparkLend market runs on Aave's code.
Aave V3 runs as a non-custodial liquidity protocol across more than 14 blockchain networks. When you supply an asset, you receive aTokens, interest-bearing tokens whose balance grows from the interest that borrowers pay, and you can use the supplied asset as collateral for a loan. Every loan is overcollateralized, which means your collateral must be worth more than the amount you borrow (source: Aave, Aave V3 Overview). Aave V4 went live on Ethereum mainnet on March 30, 2026, with a Hub and Spoke design, where assets sit in central Liquidity Hubs and the lending markets connected to them carry their own collateral types and risk rules (source: Aave Labs, Aave V4 is Live on Ethereum).
GHO, Aave's native stablecoin, is decentralized and overcollateralized, with a value pegged to the US dollar. You borrow it against collateral you supply and repay the loan, plus interest, in GHO later. On Ethereum, that borrowing runs against collateral in the Aave V3 market (source: Aave, GHO Stablecoin). V3 markets therefore keep operating beside the newer V4 Hubs.
DAI is an Ethereum stablecoin whose smart contracts adjust its supply to keep its price as close to one US dollar as possible. It was run by MakerDAO, a decentralized autonomous organization whose members held the MKR governance token and voted on the parameters in those contracts. In August 2024, MakerDAO rebranded as Sky (source: Wikipedia, Dai). Spark belongs to the same Sky ecosystem. It offers savings vaults, the SparkLend lending market, and the Spark Liquidity Layer. SparkLend receives its stablecoin liquidity directly from Sky (source: Spark, Spark Documentation Portal).
A quick way to keep the names apart is to follow 1,000 borrowed dollars through each one and ask where the coins come from.
| What you borrow | Where the coins come from |
|---|---|
| 1,000 GHO on Aave V3 Ethereum | Governance minted that GHO into the pool in advance, and the loan is recorded as your debt |
| 1,000 USDC on Aave V3 Ethereum | Other users supplied those coins to the pool |
| 1,000 DAI from a MakerDAO loan | The loan contract mints the DAI against your locked collateral |
| 1,000 DAI on SparkLend | The market lends out stablecoin liquidity that Sky supplies |
GHO and DAI both sit in the crypto-backed group of Ethereum stablecoins, whose value rests on locked crypto collateral. USDT and USDC belong to the fiat-backed group, whose issuers hold traditional currency in reserve (source: ethereum.org, Stablecoins).
GHO vs DAI: how each stablecoin is minted
GHO and DAI are both loans against locked collateral, minted by different parties. On Aave's Core market, GHO is minted into the pool before anyone borrows it (source: BGD Labs, Aave v3.4 features). DAI was designed to be minted when you lock collateral in a MakerDAO contract and borrow against it.
A facilitator is a protocol or entity that the Aave DAO authorizes to mint and burn GHO. Aave Governance has to approve each facilitator and assigns it a bucket capacity, which is the maximum amount of GHO that facilitator is allowed to mint (source: Aave, Facilitators). The v3.4 upgrade, executed on July 2, 2025, moved GHO on the Core market onto the token model every other listed asset uses (source: Aave Governance, Upgrade Aave instances to v3.4). The Core facilitator is now the GhoDirectMinter, a contract that mints GHO and supplies it to the pool, and no other address can supply GHO to that market. The GHO borrow rate is a flat figure that utilization does not move. Only governance or the GHO Stewards change it (source: Aave Governance Forum, ARFC BGD Aave v3.4).
For a borrower, the GHO already sitting in that pool is what matters. A GHO borrow draws from it and is recorded as debt on your Aave account. The loan creates no new GHO and leaves the total supply where it was (source: BGD Labs, Aave v3.4 features). What caps the loan is the market's borrow cap and the GHO still unborrowed in the pool (source: Aave DAO, GhoDirectMinter). Borrowing USDC from the same market draws on coins that came from other users who supplied them. Your loan raises the utilization of the USDC reserve, meaning the share of supplied USDC that is currently borrowed, and Aave's interest rates move up and down with utilization (source: Aave, Aave V3 Overview). That split also explains how GHO compares with USDT and USDC inside Aave, since the fiat-backed coins are supplied by users and GHO is supplied by the protocol itself.
DAI was designed around the same kind of overcollateralized loan inside MakerDAO's smart contracts. You deposit an accepted collateral type such as ether, mint DAI as a loan against it, and divide the collateral's US dollar value by the DAI you borrowed to get the loan's collateralization ratio. Every loan type carries a fixed minimum for that ratio, usually somewhere from 110% to 200%. When you repay the loan with its interest, the returned DAI is destroyed and your collateral becomes available to withdraw (source: Wikipedia, Dai).
The interest you pay also goes to different places. Interest from GHO borrowers flows directly to the Aave DAO treasury. Aave Governance also controls GHO's interest rates and collateral requirements (source: Aave, GHO Stablecoin). Under MakerDAO's design, the interest borrowers paid on top of their DAI loans was used to buy MKR on the market and burn it, which took those tokens out of circulation for good (source: Wikipedia, Dai).
Spark and SparkLend compared with Aave
SparkLend is a pooled lending market built on the Aave V3 codebase, so it behaves much like an Aave market: you supply assets, use them as collateral, and borrow against one combined position. It is a separate deployment tied to Sky, though, with its own parameters, its own source of stablecoin liquidity, and its own liquidations.
You can borrow against several collateral types in a single position, and the market offers Efficiency Mode along with the other pooled-market features Aave users know. Spark also offers isolated markets powered by Morpho, where each market pairs one collateral asset with one loan asset and carries its own oracle and liquidation settings (source: Spark, Borrow). That one-collateral, one-loan structure is Morpho's isolated model, the opposite design to Aave's pooled markets, and it is the core difference when you compare Aave with Morpho.
Two of the notable code differences on SparkLend involve DAI. The DAI market on SparkLend runs a custom interest rate strategy because of its close link to Sky. The Savings DAI market also needed its own price oracle (source: Spark, Security Audits). On the liquidity side, Spark borrows from Sky's stablecoin reserves and deploys that capital across DeFi, centralized finance, and real-world assets (source: Spark, Spark Documentation Portal). The result is a stablecoin supply on SparkLend that depends on Sky, in much the same way that GHO's supply depends on Aave's facilitators.
Shared code does not mean a shared position. SparkLend measures each account with its own health factor, built from the collateral and loans you hold on SparkLend, and when that number falls below 1, anyone can repay part of the debt and receive your collateral at a discount. Sky Governance sets the liquidation bonuses on SparkLend assets (source: Spark, Liquidations).
The mistake to avoid is treating the two apps as one account because their screens look alike. Suppose you borrow on both, and ether drops sharply. Spare collateral on Aave does nothing for a thin SparkLend position, so the SparkLend loan is the one that can be liquidated first, and the same holds in reverse.
Health factor and liquidation: Aave beside a DAI loan
On Aave, one number called the health factor decides when your loan can be liquidated. It compares your collateral, weighted by each asset's liquidation threshold, with your total debt, and liquidation becomes possible once it falls below 1. A DAI loan is judged by its collateralization ratio against the fixed minimum for its loan type.
The health factor equals your total collateral value multiplied by the weighted average liquidation threshold, divided by your total borrow value. The liquidation threshold is a percentage that Aave Governance sets for each collateral asset, and it caps how much value you can borrow against that asset. Take the standard case: you supply $10,000 worth of ETH, whose liquidation threshold is 80%, and then take out 6,000 GHO. That gives a health factor of 10,000 × 0.80 ÷ 6,000, or 1.333 (source: Aave, Health Factor & Liquidations).
Now let the ETH price slide. If your collateral falls to $8,000, the health factor becomes 8,000 × 0.80 ÷ 6,000, or about 1.067. At $7,500 it reaches exactly 1, because 7,500 × 0.80 equals the 6,000 GHO you owe, so a fall of one quarter in the price of ETH takes this position to the point where liquidation can begin. Every loan in the same Aave market counts toward the total, so a GHO loan and a USDC loan against the same ETH share one health factor.
Once the health factor drops below 1, a liquidator repays part of your debt and takes the same value of your collateral along with a liquidation bonus. While the health factor stays above 0.95 and both your collateral and your debt are worth at least $2,000, a single liquidation can repay up to 50% of the debt. At 0.95 or below, or on a smaller position, the whole debt can be repaid at once (source: Aave, Health Factor & Liquidations).
A DAI loan on the same collateral is measured differently. With $10,000 of ether behind 6,000 DAI, the collateralization ratio is about 1.67 times the debt, and the loan stays open as long as that ratio stays above the minimum for its loan type. When the ratio drops below that minimum, anyone may call the contract to sell part of the collateral for DAI on a decentralized exchange. The DAI raised pays off the debt and also funds a reward for whoever made the call (source: Wikipedia, Dai).
Efficiency Mode (E-Mode) changes Aave's numbers for assets that move together. When you supply and borrow assets in the same E-Mode category, such as USD-pegged stablecoins, Aave allows a higher loan-to-value (LTV) ratio, the share of your collateral's value that you can borrow (source: Aave, Aave V3 Overview). Supplying more collateral or repaying part of the loan raises a falling health factor (source: Aave, Health Factor & Liquidations). Both steps are the basis of protecting an Aave loan from liquidation.
Aave vs Maker, Spark, and DAI side by side
Side by side, the five names split into two lending markets, two stablecoins, and the organization behind DAI. Aave and SparkLend are pooled markets that share code but keep separate positions, while GHO and DAI are both crypto-backed dollars borrowed against collateral under different governance, caps, and liquidation rules.
| Question | Aave and GHO | Maker (now Sky) and DAI | SparkLend |
|---|---|---|---|
| What it is | A lending protocol that also mints its own stablecoin | The organization behind DAI, a stablecoin minted from collateral loans | A pooled lending market built on Aave V3 code |
| How new stablecoins appear | Approved facilitators mint GHO up to their bucket capacity | Collateral loans in MakerDAO smart contracts mint DAI | Stablecoin liquidity comes directly from Sky |
| The risk number you watch | Health factor, liquidation below 1 | Collateralization ratio against a minimum per loan type | Its own health factor, separate from any Aave position |
| Who sets the rules | Aave Governance | MKR holders under MakerDAO, now Sky | Sky Governance for items such as liquidation bonuses |
| Stablecoin interest | GHO interest goes to the Aave DAO treasury | Used to buy and burn MKR under MakerDAO | The DAI market uses a custom rate strategy tied to Sky |
Governance is where the AAVE token enters the picture. Aave Governance runs on the votes of AAVE, stkAAVE, and aAAVE holders on Ethereum mainnet. Each holder's voting power is the sum of those three balances (source: Aave, Governance). Those votes approve each GHO facilitator, set its capacity, and adjust GHO's rates and collateral rules.
If your interest in Aave extends to the AAVE token that carries those votes, another way to get exposure is to trade it on an exchange. BloFin lists AAVE/USDT Spot, which buys the token itself, and the AAVEUSDT Perpetual, a contract on its price with no expiry date. If you hold dollar stablecoins and want to switch between USDT and USDC, the two largest fiat-backed stablecoins by market capitalization, USDC/USDT Spot covers that trade. An exchange trade changes a balance in your BloFin account, while borrowing GHO, opening an Aave loan, or raising a health factor all happen from your own wallet connected to the protocol.
Maker and taker fees on those markets depend on your fee tier, which follows your 30-day trading volume or your asset balance, so check the BloFin fee schedule for your tier before you place the trade.
Which one fits what you want to do
Choose by the action you plan to take next. Borrowing dollars against collateral you already keep on Aave points to GHO or an Aave stablecoin reserve, holding DAI points to Aave reserves or the Sky ecosystem, and using SparkLend means running a second position with its own health factor and its own governance.
Say you keep ETH supplied in the Aave V3 Ethereum market and want dollars without selling it. GHO and a borrowed reserve such as USDC both fit, so the choice comes down to the borrow rate you see in the app and what you plan to do with the dollars. The basic supply, borrow, and interest flow is the same either way, which is the core of how Aave works for every market it runs.
Holding DAI is a different starting point. Aave runs lending markets for stablecoins including DAI, USDC, and USDT (source: ethereum.org, Stablecoins). You can supply DAI wherever it is listed and earn interest from the people who borrow it. DAI held on Aave is still DAI, with its backing and rules set under Sky, and supplying it never mints GHO.
SparkLend fits when you want stablecoin liquidity supplied by Sky or the rate strategy of its DAI market, and the price of using it beside Aave is a second set of liquidation bonuses and a second governance system to follow. The same questions about collateral, liquidation, and voting apply when you set Aave against Compound, which uses its own pooled design and its own governance. Smart contract risk and oracle risk come with every one of these positions, and they sit at the center of whether Aave is safe for your funds.
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 move between the two fiat-backed dollars, open the USDC/USDT Spot trading page.
Frequently asked questions
Is USDS the same as DAI?
USDS is the successor to DAI, a stablecoin fully backed by crypto and built for onchain savings and rewards, and both tokens still trade, with USDS now the larger of the two by market capitalization (source: ethereum.org, Stablecoins). The Sky Frontier Foundation reported that USDS supply grew 74% to $9.2 billion during 2025. A February 2, 2026 outlook from the Sky Frontier Foundation projected that supply to nearly double to $20.6 billion over 2026 (source: PR Newswire, Sky Frontier Foundation 2026 Outlook). Check which of the two a lending market lists before you supply or borrow, since they are separate tokens with separate balances.
How did DAI hold its peg in its first year?
DAI launched on Ethereum mainnet on December 18, 2017, with ether as the only accepted collateral, and it stayed close to one US dollar through a first year in which the price of ether fell by more than four fifths. MakerDAO steered the amount of DAI in circulation, and with it the price, through three levers: the types of collateral it accepted, the minimum collateralization ratio for each loan type, and the interest rates for borrowing or holding DAI. A minimum set well above the debt also gives the system time to sell collateral and cover a loan in a flash crash (source: Wikipedia, Dai).
Can GHO be used on networks other than Ethereum?
GHO reaches other networks through the CCIP cross-chain facilitator, which locks GHO on Ethereum mainnet and mints it on a governance-approved destination network, then burns it there and unlocks it on Ethereum when it moves back. In the Aave app, borrowing GHO sits on the Dashboard and bridging sits under Bridge GHO in the top-right navigation bar, and the GHO Stability Module is reached through exchanges that have integrated it, such as CoW Swap (source: Aave, Facilitators). Check which network your wallet is connected to before you borrow or bridge GHO, because each network keeps its own separate GHO balance.
How can GHO's limits change between governance votes?
Some GHO limits can change without a full vote, because Aave Governance hands them to stewards that act inside fixed ranges. The GHO Bucket Steward can raise a facilitator's bucket capacity by up to 100%. The GHO Aave Steward can raise or lower GHO's borrow cap by up to 100%. The GHO Stability Module Steward can raise that module's exposure cap by up to 100% (source: Aave, Governance). Any change outside those ranges still has to pass as a formal proposal and an onchain vote, which keeps large moves in the hands of token holders.
Who can liquidate an Aave position?
Anyone can, since liquidations on Aave are permissionless and any network participant may start one once a position is eligible. In practice the work is competitive: liquidators watch positions, react to oracle price changes, and send transactions with high priority, so successful liquidations often depend on custom bots. A partial liquidation must also leave at least $1,000 of both collateral and debt, or the position has to be cleared in full, a rule that keeps tiny dust balances from building up (source: Aave, Health Factor & Liquidations).
Is SparkLend as safe as Aave because it uses Aave's code?
Shared code covers one layer of risk. SparkLend's code comes from Aave v3, with upgrades 3.0.1 and 3.0.2 included, and that code has been audited extensively. Spark-specific audits then cover the changes Spark made on top of it (source: Spark, Security Audits). Spark runs the market conservatively, with a narrow collateral set, prices drawn from several oracles, strict rate limits, and first-loss capital, money set aside to absorb losses before depositors do (source: Spark, Borrow). Parameters and governance still belong to Spark and Sky, so judge them on their own record.
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Primary sources include Aave's help center, V3 documentation, governance documentation, and V4 launch post, the Spark documentation, ethereum.org, and Wikipedia. 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.