Gemini Dollar (GUSD): Use Cases and Unique Features
Gemini Dollar (GUSD): Use Cases and Unique Features
GUSD is a stablecoin specifically designed for high scalability, large transaction volume, and a wide variety of transaction types. It is pegged in a 1:1 ratio to the U.S. Dollar, and is an ERC-20 token built on the Ethereum blockchain.
Updated February 23, 2021 • 2 min read
Gemini is a New York trust company that operates under the direct supervision of the New York Department of Financial Services and is subject to the capital reserve requirements, cyber security requirements, and banking compliance standards set forth by the NYDFS. Gemini obtained approval to begin issuing Gemini Dollars, or GUSD, on September 9, 2018, making GUSD the first regulated stablecoin in the world. GUSD is specifically designed for high scalability, large transaction volume, and a wide variety of transaction types. GUSD is pegged in a 1:1 ratio to the U.S. Dollar, and is an ERC-20 token built on the Ethereum blockchain.
GUSD Use Cases
The Gemini Dollar (GUSD) acts as a bridge between traditional financial systems and the blockchain-based financial system, focusing on giving users more transparency and financial freedom. GUSD has a growing number of use cases:
Send U.S. dollars to anyone in the world on the blockchain as easily as sending an email, in just a few clicks.
Earn interest on GUSD holdings by using lending services with interest rates of up to 9% per year.
Make routine purchases at a number of retail outlets (including Bed Bath & Beyond, AMC Theaters, and Nordstrom).
Perform larger transactions such as booking travel (via Travala.com) or paying freelancers (via Latium).
Build on the traditional financial system to create new methods for transacting. For example, a Brazilian company leveraged GUSD to create a real estate security token to drive value and transparency for its investors. These tokens yield dividends and are traded using GUSD.
Trade with other ERC-20 tokens on decentralized exchanges like Uniswap and Curve.
Send remittance payments to friends and family in other countries around the world.
The Gemini Dollar Approach: Proof of Solvency
The Gemini dollar is issued by the Gemini Trust Company, which has taken substantial steps to ensure the stable value and continued security of its cryptocurrency. Gemini achieves stability for GUSD by pegging its value in a 1:1 ratio to the U.S. dollar and directly collateralizes each Gemini dollar against a U.S. dollar held in a Gemini Trust account. In other words, for every GUSD in existence, Gemini holds one U.S. dollar. This specialized account is maintained at State Street Bank and the balance is audited monthly by BPM LLC, an independent accounting firm that publishes its audit publicly on a monthly basis.
Furthermore, the Ethereum blockchain’s distributed ledger serves as a publicly verifiable record of the number of Gemini dollars in circulation. BPM confirms that this data is factual under the official attestation standards established by the American Institute of Certified Public Accountants. With this process, Gemini provides proof of solvency — providing a public, transparent guarantee that the number of USD held as collateral is sufficient to back the number of Gemini dollars in circulation.
Gemini Contract Separation
The Gemini Dollar protocol is built on the Ethereum blockchain, and leverages smart contract technology.To guarantee security and stability, as well as support scalability, optimize efficiency, and easily resolve bugs, the Gemini Dollar protocol is separated into multiple, independent, but coordinated layers in a configuration known as “contract separation.” The following three layers make up the contract separation process: Proxy, Implement, and Store.
Through the use of smart contracts, the Proxy layer is designed to create and transfer GUSD. It also provides a mechanism to stop GUSD minting and transfers in cases of security concerns or legal considerations. The proxy layer can be considered the governance layer and communicates with the implement layer (described below) to determine which transactions should be executed.
The Implement layer (also referred to as “Impl”) is where the underlying programmatic logic and smart contract data is stored. Actions within this layer are only executed when instructions are received from the Proxy layer.
The Store layer contains a distributed ledger and keeps track of specific balances held by each user. In this final layer, transactions are published publicly onto the Ethereum blockchain.
These three layers work together to create a unique system that allows the Gemini dollar to be efficient, transparent and equitable for all users on the Gemini platform. Each plays a critical role in ensuring GUSD’s accountability, security, ease of use, and ongoing technical innovation as the Gemini platform and Gemini dollar usage continue to grow.
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