Aave’s $GHO stablecoin is often described as the protocol’s next big revenue driver. But when you look at the numbers, GHO is more of a loss leader On the supply side, ~$164M of GHO is borrowed at ~5.5% APR. On the demand side, the sGHO savings token holds ~$154M and pays ~9% APY. That means the DAO brings in ~$0.75M a month in interest but pays ~$1.16M out, a net deficit of about $0.39M/month. To keep GHO liquid, the DAO is also paying for liquidity. The GHO Liquidity Committee’s phase IV budgets allocate 650k GHO for Ethereum & 300k GHO for Arbitrum each quarter ($950k). A later proposal sought authority to spend 3.5M GHO on continuing ops. Now, a new ‘CEX Earn’ proposal asks for 5M GHO to incentivize centralized exchange deposits and marketing. Combined, these incentive programs run into tens of millions of dollars. Altogether, GHO is likely costing Aave near enough to $1m in negative PnL per month. Advocates note that 1 GHO minted supposedly brings the same revenue as $10 of traditional borrowing. But that revenue isn’t materializing into a benefit for the DAO. A revenue driver that loses money and depends on heavy subsidies isn’t sustainable. If the DAO stops these payouts, demand for GHO will drop quickly. Sustainable growth will require organic use cases and demand sinks, not endless incentives. More rational rates for borrowers and lenders seem like the logical first step Questions for those closer to what is going on at @aave - What changes are planned to align sGHO yields with borrow rates, if any? How will GHO generate organic demand that doesn’t rely on subsidies from the DAO's warchest? Happy to learn if there’s a clear path to profitability. Maybe someone at @Token_Logic or @lemiscate will know