Aave Lifts GHO Borrow Rate to 4.5% as USDC Reserve Runs Dry

Published October 6, 2026, 04:52 UTC

The cost of borrowing GHO, the Aave lending protocol's own stablecoin, has risen to 4.5% a year on Aave V3's Ethereum Core market, up from 4.25%. The change was proposed by TokenLogic, a service provider to the Aave DAO, in an October 2 governance post, to be carried out by the GHO Risk Council.

Aavescan's daily snapshots showed 4.25% at 00:00 UTC on October 3 and 4.5% at 00:00 UTC on October 4 and October 5, CryptoSlate reported, which places the change between those readings.

Closing a 25-point gap

Until now, borrowers could mint GHO on Core at 4.25% and deposit it into sGHO, Aave's savings vault, to earn 4.5%. "The DAO funds this 25 bps difference," TokenLogic wrote. At 4.5%, the borrow rate now matches the savings rate. TokenLogic said it would also sit slightly above the 4.39% cost of borrowing USDC and USDT on Aave at the time.

The update also raised the base rate for GHO on Aave's Ethereum Prime market from 2.75% to 3%. That lifts Prime's rate at its target utilization from 4% to 4.25%. At 86% utilization, Prime borrowers would pay about 4.17%, up from 3.92%, according to the post.

The peg and the empty USDC module

GHO "traded below $0.999 for most of September and closed 1 October near $0.9993," TokenLogic wrote. Over the same period, the reserves in GHO's stability modules fell. These modules, known as GSMs, let users swap between GHO and USDC or USDT. TokenLogic said the USDC module "is now depleted," while the USDT module held about 22.5 million USDT.

A higher rate gives some borrowers a reason to repay. But TokenLogic noted that repayment only refills the modules if borrowers get their GHO by depositing USDC or USDT into them. Buying GHO on the open market instead would support the price, not the reserves. CryptoSlate, citing Aavescan, reported that borrowed GHO on Core stood at 116 million on October 2 and 115.8 million on October 5.

Why it matters

A stablecoin is meant to stay close to $1, and being able to swap it for other dollar stablecoins is part of what keeps it there (see our explainer on how stablecoins work). The modules are one of GHO's routes for that swap. TokenLogic said it will watch GHO's peg, module reserves, sGHO deposits and GHO debt after the change.

The update also ties into a separate Aave Institutional proposal. TokenLogic said current module reserves "do not cover the full facilitator capacity" that proposal envisions, so its initial loans would be funded from the DAO balance sheet.

This article is news reporting and is not investment advice.

Sources

• TokenLogic via Aave Governance Forum, [[GHO Stewards] October 2026 - GHO Borrow Rate Update](https://governance.aave.com/t/gho-stewards-october-2026-gho-borrow-rate-update/25754) (Oct. 2, 2026), primary source
• CryptoSlate, Aave hikes GHO borrow rates to rescue depleted stablecoin pools (Oct. 5, 2026)