GHO expansion and DeFi lending shifts

Aave expands GHO to new networks

Aave V3 maintains $16.8B in total value locked as of September 15, 2026. The Aave Liquidity Committee expands GHO to Base and Avalanche during Phase V. This expansion follows GHO’s deployment on Arbitrum. While Lido’s market share in Ethereum staking fell to 21.18% in the first half of 2026, stETH still drives demand through e-mode borrowing. The Aave Liquidity Committee targets $20M in utility liquidity pools for GHO on Base and Avalanche. The committee aims for an annualized GHO peg volatility of less than 5.00% on these new networks. GHO users on Ethereum experience a swap price impact of less than 0.10% for $5M transactions. Earlier, the Aave Liquidity Committee implemented a 350bps borrow rate increase to recover the GHO peg, which resulted in 14.5M units of GHO debt being repaid. GHO’s core borrow rate sits at 4.5%. In late 2024, GHO debt expansion led to shifts in the Balancer 3pool composition. This followed borrow rate amendments of 50bps, 75bps, and 50bps that had minimal effect. The committee also targets $50M in DEX liquidity pools on Ethereum. The total market capitalization of all stablecoins exceeds $153 billion, with USDT sitting at $183.3B and USDC at $73.4B.

Morpho vaults and market isolation

Morpho Blue holds $9.8B in TVL through its modular vault architecture. In the wake of the Stream Finance xUSD depeg that caused $93 million in losses, Morpho co-founder Merlin Egalite noted that only 3 to 4 of the 320 vaults experienced temporary illiquidity. Morpho targets 90% utilization. When utilization hits 100%, the interest rate model increases rates by 4x to restore equilibrium within minutes or hours. This isolation strategy differs from Compound V3, which manages $1.4B in TVL through isolated markets. Compound V3’s USDC supply APY shifts between 2.0% and 6.5% depending on utilization. Compound retains a reserve factor of 15% to 25% of generated interest. SparkLend holds $4.9B in TVL and concentrates its markets on Ethereum and Gnosis. Morpho’s design unbundles risk from liquidity provision by allowing anyone to deploy a vault with an oracle and an interest-rate model. This allows curators to allocate depositor funds across vaults to mitigate specific risk profiles. The Morpho model prevents the contagion of risk from one market to another, as seen when the xUSD depeg only affected a tiny fraction of the protocol’s total vaults.

Stablecoin liquidity and institutional flows

Aave Horizon allows qualified institutional investors to borrow GHO, RLUSD, or USDC against tokenized real-world assets on Ethereum. This market launched on August 26, 2025. The Aave Liquidity Committee works to maintain the GHO peg through the deployment of a new facilitator on Ethereum that leads to GHO being minted, bridged, and deposited into Aave v3 to support adoption. Lido’s recent proposal to inject $5.8 million in stETH targets the shortfall from the Kelp exploit, which left $292 million in deficits. The Kelp attack also contributed to a nearly $8 billion drop in Aave’s total value locked. The attacker used stolen Kelp DAO-linked assets as collateral on Aave to exploit the protocol. Lido’s stETH trades at $1,091 while Ethereum trades at $1,127. Lido’s institutional segment grew to 35.3% of staking in the first half of 2026, with Bitmine holding 11.5% and Coinbase holding 10.9%. You should examine the utilization curves if you seek predictable yields. Will the Aave Liquidity Committee successfully maintain the GHO peg while expanding to new networks?