Arbitrum GSM Configuration Error: GHO Paired with Deprecated USDC.e

Aave's newly deployed Remote Governance Stablecoin Module (GSM) on Arbitrum contains a critical configuration issue that pairs GHO with the wrong USDC variant. The remote GSM has been configured to use USDC.e, the bridged version of USDC on Arbitrum, rather than native USDC—a particularly problematic choice given that USDC.e is scheduled for deprecation across Aave V3.

The underlying technical problem lies in how the GSM contract is structured. The USDC GSM contract at 0x53E0cE250d06043414070100458546AaF4eF284eD references a StataToken wrapper (0xE6D5923281c89DC989D00817387292387552d5C1) that in turn wraps bridged USDC.e (0xFF970A61A04b1cA14834A43f5dE4533eBDDB5CC8) rather than the native USDC contract (0xaf88d065e77c8cC2239327C5EDb3A432268e5831). This nested wrapping introduces unnecessary complexity and counterparty risk, especially when Circle's native USDC integration on Arbitrum is available and preferred for stablecoin infrastructure.

This misconfiguration appears symptomatic of the broader ecosystem transition underway on Arbitrum. USDC.e exists as a legacy bridge token from the period before Circle deployed native USDC directly on the network. As development teams consolidate around native assets, USDC.e has increasingly become a liability—an orphaned token that fragments liquidity and confuses user experience. The Aave governance community has already voted to deprecate low-adoption bridged assets, recognizing that maintaining multiple versions of the same underlying token dilutes utility and creates unnecessary friction across the protocol.

The implications of this configuration error extend beyond a simple user inconvenience. For GHO, Aave's native stablecoin, the GSM is meant to provide efficient swap mechanics between GHO and reference assets at a 1:1 peg, enabling arbitrage and stabilization mechanisms. Anchoring GHO liquidity to a deprecated asset undermines confidence in these swap routes and reduces the effectiveness of GHO's stabilization infrastructure. Users who rely on GSM pairs for portfolio rebalancing or protocol arbitrage would be funneling volume through a token scheduled for wind-down, creating tail risk around potential liquidity migration disruptions. Addressing this configuration will require governance action to redirect the StataToken underlying to native USDC, ensuring that GHO's stabilization mechanisms remain robust as the Arbitrum ecosystem consolidates around canonical asset versions.