GHO is minted by borrowers and suppliers who use assets they've provided as collateral in V3 on Ethereum markets. They create new GHO while still earning interest on the assets they used as collateral.

The stability of GHO is maintained by market efficiencies. If the value of GHO goes above $1, the market would adjust it back to $1 through arbitrage, where people swap GHO for other stablecoins to make a profit. On the other hand, if the value drops below $1, it becomes profitable to repay debt, leading to a decrease in the total supply of GHO. This reduction in supply helps restore the peg and keeps GHO's value stable.

Assets that are available in the Aave Protocol can be used to back GHO.

The Aave DAO will manage the supply of GHO, the interest and determine risk parameters.

GHO introduces the concept of Facilitators. A Facilitator (e.g., a protocol, an entity, etc.) has the ability to trustlessly mint (and burn) GHO tokens. To be added as a Facilitator they would have to be approved by Aave Governance. Various Facilitators will be able to apply different strategies to their generation of GHO.