Aave raises GHO borrow rate to 4.5% as stablecoin reserves run thin
Aave raises GHO borrowing cost on Ethereum Core
On Oct. 3, 2026, Aave's GHO Risk Council raised the borrowing rate for GHO in the Ethereum Core market to 4.50% from 4.25%. GHO is a stablecoin, a token designed to stay close to one U.S. dollar. The change was made in a transaction recorded on the blockchain at 5:37 p.m. ET, according to Etherscan, a public blockchain explorer.
The same transaction lifted the base rate on Ethereum Prime from 2.75% to 3%. The council acted through the markets' GhoAaveSteward contracts under a delegated mandate, carrying out a plan that Aave DAO service provider TokenLogic had set out in an Oct. 2 notice.
The rate changes in numbers
- Core GHO borrow rate: up to 4.50% from 4.25%, and it stays the same at all levels of borrowing.
- Prime base rate: up to 3% from 2.75%. At Prime's 92% target utilization level, the rate rose to 4.25% from 4%.
- Prime's utilization target and slope settings were not changed.
- The higher Core rate applies to existing variable-rate debt as well as new borrowing.
- The move closes a gap of 25 basis points, or 0.25 percentage points, with the 4.50% savings rate TokenLogic reported for sGHO.
What TokenLogic's notice said
TokenLogic, an Aave DAO service provider, wrote on Oct. 2 that USDC reserves inside the GHO Stability Module were depleted and that redemption reserves were declining. These modules, often shortened to GSM, let holders swap GHO for other stablecoins.
The notice also dealt with sGHO, a savings product built on GHO that pays a yield to depositors. Before the change, a borrower could borrow GHO at 4.25% and deposit it into sGHO at 4.50%, with the difference covered by the DAO. TokenLogic had earlier described this spread as a tension the product was designed to handle: drawing in savings deposits without pushing people to borrow purely to capture the gap.
What on-chain data shows
On Oct. 5, Aavescan, an Aave data dashboard, showed 114.7 million GHO borrowed on Core. On Prime it showed a 4.17% borrow rate, a 3.24% supply rate and utilization of 86.35%. Prime had 54.4 million GHO supplied and 47 million borrowed, leaving roughly 7.4 million GHO unborrowed based on Aavescan's rounded figures. That leftover amount covers withdrawals of GHO, not conversions into USDC or USDT. Aave's rules also cap withdrawals at the unborrowed balance, and collateral requirements can limit them further.
The Ethereum USDC module held only a few cents worth of wrapped Aave USDC when it was read on Oct. 5, while the USDT module held about $22.5 million in wrapped Aave USDT, according to Etherscan. Access to the underlying tokens also depends on lending pool liquidity.
What is confirmed
The rate changes were executed and recorded on the blockchain, and they match the plan described in TokenLogic's Oct. 2 notice. The stated purpose was to encourage repayment and support the stablecoin reserves behind GHO conversions.
What is still unclear
A higher borrowing rate does not by itself put funds into the modules, and TokenLogic says as much. Borrowers who buy GHO on the open market can support its price, but only borrowers who exchange USDC or USDT for GHO through a module refill that module's reserves. The source does not report any planned follow-up rate changes or timeline, and the module balances cited are point-in-time readings that can change at any block.
Why it matters for savers and borrowers
For people holding sGHO, redeeming and exiting are two separate steps. According to Aave's sGHO documentation, shares can be redeemed for GHO without any waiting period. Turning that GHO into USDC or USDT still depends on conversion liquidity being available.
So the rate increase is a tool aimed at balances, not a guarantee of easier conversions. Whether reserves improve depends on how borrowers respond and whether stablecoins flow back into the modules.
Where this came from
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.
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