Aave's Ethereum Core market now lists a 4.5% borrow APR for GHO, up from 4.25%, after a parameter change that landed between the protocol's midnight snapshots on Oct. 3 and Oct. 4. The move, proposed by TokenLogic on Oct. 2, ends a stretch in which borrowers could take GHO at 4.25% and park it in sGHO at 4.5% — leaving the DAO to cover the 25-basis-point gap.
The trade that forced the fix
That spread was the whole problem. Borrow GHO cheap on Core, deposit into sGHO, collect the higher yield. The DAO eats the difference. It's a small number per user, but it's a one-way flow, and TokenLogic's proposal says as much: aligning the Core borrow rate with the sGHO savings rate removes the free carry.
SGHO itself hasn't changed. Users deposit GHO, receive vault shares, and can redeem those shares for GHO instantly — no cooldown. Deposited funds aren't rehypothecated, per Aave's documentation, and the vault still carries a pause state and user-specific withdrawal limits that can affect live availability.
A depleted USDC module, and a fee change that isn't live yet
TokenLogic also reported on Oct. 2 that the USDC GHO Stability Module was depleted. That's the part with teeth. A higher borrow rate only helps reserves if borrowers actually bring stablecoins back into the GSM when they repay. Repaying GHO debt without routing USDC into the module does nothing for conversion liquidity — it just lowers outstanding debt, which is an incomplete measure.
Core's midnight snapshots put GHO borrowed at 116 million on Oct. 2 and 115.8 million on Oct. 5. Roughly flat. That tells you debt isn't the story; the stablecoin side is.
Separately, TokenLogic's September parameter notice floated 15-basis-point USDC redemption fees on Ethereum, Monad and Arbitrum, a 10-basis-point Ethereum USDT fee, and zero mint fees. That's a proposal, not a live schedule — the implementation language doesn't establish executed fees.
Plasma is the escape hatch, with a caveat
Plasma offers a route to USDT inventory beyond Ethereum via Chainlink CCIP, and TokenLogic's architecture — RemoteGSM, described back in March — is built to supply preminted GHO to a GhoReserve that GSMs draw from and restore under assigned limits. Useful, in theory.
The catch is speed. Kairos Research's September analysis, using Sept. 8 readings, found 40.6 million in nominal Plasma GSM redemption inventory against 38.6 million in underlying lending-pool cash, and estimated at least 9.7 hours of rate-limit time to move 40 million GHO to Plasma under the bridge settings it measured. That assumes a full initial bucket and no competing traffic. It excludes message delivery and the conversion steps after.
Numbers circulating for USDT reserves don't line up cleanly either. Aave Labs' institutional proposal counted 19.2 million USDT on Ethereum and 40.7 million on Plasma as of Sept. 24 — 59.9 million total — and excluded USDC instances because redeemable balances were negligible. TokenLogic's Oct. 2 update cited roughly 22.5 million USDT in a USDT GSM without naming the network. Comparing those two figures wouldn't establish a decline, since neither gives matched Oct. 5 balances.
What to watch
The rate bump is live. Whether it does anything for USDC conversion liquidity depends on borrowers choosing to repay through the GSM modules rather than some other path — and that's not something the rate alone demonstrates. Watch the module balances, not the debt number.
