Aave raises core GHO borrow rate as redemption reserves run thin

Aave is making it more expensive to borrow its own stablecoin. The GHO Risk Council has raised the core GHO borrow rate on Ethereum, which The Defiant reports now sits at 5%, and it also lifted the base rate on the Prime market. The timing is not random. Ethereum’s USDC conversion module, one of the main tools that keeps GHO tied to the dollar, was nearly empty when the change landed. What changed, and why the math matters The latest move follows a proposal published on October 2, 2026, by TokenLogic, which serves among the GHO Stewards. That proposal called for lifting the GHO borrow rate on the Ethereum Core market from 4.25% to 4.50% APR. The 5% figure reported by The Defiant sits above that level. The stated goal of the October 2 proposal was alignment. The Aave Savings Rate, the yield paid to people who stake GHO as sGHO, was set at 4.50%. With borrowing at 4.25%, a user could take out GHO cheaply and park it in sGHO for a higher return. Closing that 25 basis point gap was meant to end the free lunch. Matching the borrow cost to the savings yield removes the incentive to mint GHO purely to farm sGHO. The Prime market got the same treatment. Under the TokenLogic proposal, the E...