Discount & rate breakdown
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Facilitator bucket & GSM peg defense
Bucket headroom is a supply-side signal, not a fee — it tells you how much more GHO this facilitator is still allowed to mint before governance must raise its cap.
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Two levers, and they don't move together
Most GHO explainers describe the stkAAVE discount and the facilitator/bucket system as if they were one mechanism. They aren't. The discount is a personal, on-chain-computed rate reduction tied to how much AAVE you've staked in the Safety Module — it changes the interest you pay, and it changes the moment you stake, unstake, or borrow more GHO. The bucket cap is a protocol-wide supply governor that has nothing to do with any individual borrower's collateral or staking — it changes only when Aave governance votes, and it can bind (rate-limit new GHO minting) even for a borrower who is nowhere near their own discount limit.
The official discount math, per Aave's GhoDiscountRateStrategy: every 1 stkAAVE entitles the holder to the discount rate on up to 100 GHO of debt. If borrowed GHO ≤ stkAAVE×100, the entire position gets the discounted rate; if it's larger, the calculator below splits the debt into a discounted slice (stkAAVE×100) and a full-rate slice (the remainder) and blends them into one effective annual rate. Unstaking any AAVE, or borrowing past your current discount ceiling, both dilute that blended rate back toward the undiscounted borrow rate — there's no grace period, the discount strategy reads your live stkAAVE balance.
The GSM sits on top of both of those as a separate peg-defense facilitator: it isn't where most people borrow GHO, it's where arbitrageurs swap GHO for USDC/USDT (or back) near 1:1 minus a small fee whenever the market price drifts off peg, which is why its "bucket" utilization is a different kind of signal — high GSM volume in one direction is itself a real-time readout of which way the peg is currently under pressure.
FAQ
What are GHO facilitators and bucket caps?
GHO is not minted by a single contract the way most stablecoins are — Aave governance whitelists separate "facilitators" (the Aave V3 market itself, the GHO Stability Module, and others added over time), and each one gets its own bucket: a hard cap on how much GHO it is allowed to mint plus its current utilization against that cap. If a facilitator is ever compromised or misbehaves, the maximum possible damage is capped at its bucket size, not the entire GHO supply — governance raises buckets gradually as a facilitator proves itself rather than granting unlimited mint rights on day one.
How does the stkAAVE discount on GHO borrow rate actually work?
Aave's GhoDiscountRateStrategy gives every staked AAVE (stkAAVE) token the right to a discount on up to 100 GHO of borrowed debt — officially documented as the 100-GHO-per-stkAAVE ratio. Only the portion of your GHO debt covered by that ratio gets the discount; anything you borrow above stkAAVE×100 pays the full, undiscounted governance-set rate. The discount percentage itself (30% at GHO's 2023 genesis) is also a governance-set parameter that can be voted up or down, so always check the live rate on app.aave.com rather than assuming a fixed number.
What is the GHO Stability Module (GSM) and how does it defend the peg?
The GSM is a facilitator built purely for peg defense: it lets anyone swap a governance-approved stable asset (USDC, USDT) for GHO, or GHO back for that asset, at close to 1:1 minus a small fee — functioning like a Maker-style PSM. When GHO trades below $1, arbitrageurs buy discounted GHO on the open market and redeem it 1:1 through the GSM for USDC/USDT, pocketing the spread and pushing GHO's price back toward peg; the reverse happens if GHO trades above $1. Its own price-strategy module can flex between fixed and dynamic pricing if governance wants a different peg-defense behavior.
What happens if I borrow more GHO than my stkAAVE discount covers?
Nothing breaks — you simply pay a blended rate. The first stkAAVE×100 GHO of your debt accrues interest at the discounted rate, and every GHO borrowed beyond that accrues at the full governance-set borrow rate, with your effective average rate landing somewhere between the two depending on what share of your debt is covered. Borrowing exactly at or below your discount threshold gets you the full discounted rate on 100% of your debt; borrowing far beyond it dilutes the discount down toward the undiscounted rate as the uncovered portion dominates the blend.
Why does facilitator bucket utilization matter if I'm just borrowing GHO?
Bucket utilization is a supply-side health signal, not a fee you pay directly. A facilitator sitting near 100% of its bucket cap has no headroom left to mint more GHO until governance votes to raise the cap — during periods of high demand that can mean new borrows get rate-limited or GHO trades at a premium simply because supply can't expand fast enough, independent of your own collateral or discount. Watching headroom (cap minus utilization) is the same instinct as watching a lending market's supply cap before depositing: it tells you how much room is left before the mechanism that keeps things running smoothly hits a wall.