Proposal: Add Support for Gemini GUSD as Collateral

Proposal: Add Support for Gemini GUSD as Collateral

Hi Aave Community! We would like to formally propose GUSD to be supported as a collateral asset on Aave.

References

GUSD is currently a supported asset on Aave, and we would like to have it be a collateral option as well.

Over the past months, growing support for GUSD by decentralized finance projects and platforms has led to a surge in its market cap to more than $120 million. We are looking to continue to grow the DeFi ecosystem on Gemini (by supporting governance token listings and working through future use cases e.g. bridge to defi, L2 support etc.) and through GUSD, which we believe to be one of the most secure and trusted USD-backed stablecoins.

Available Liquidity

There is currently over $100mm in GUSD liquidity in DeFi projects, and we’re actively engaging with industry partners on how to grow this liquidity in the ecosystem, and on Aave specifically. There is support for GUSD on a myriad of DeFi applications and projects, some of the larger ones include liquidity pools on Curve, Uniswap and Balancer, as well as collateral on Maker, and yield strategies on Yearn.

GUSD can also be created and redeemed for 1:1 USD on Gemini at scale. There are also no fees when creating and withdrawing GUSD on Gemini - we cover all gas costs.

Risk Parameters

Given GUSD is still growing in DeFi and on Aave, we think the below risk parameters could be considered:

  • LTV 70%
  • LT 75%
  • LB 5% (liquidation incentive)
  • RF 20%

Thank you all, and we look forward to your feedback.

Onward and upward,

Tyler Winklevoss
Gemini, Co-Founder & CEO

14 Likes

I agree with this proposal.

Gemini should also let their users deposit directly into Aave for yield.

11 Likes

YES FOR IT

Wow look who’s in our house ?!
Welcome Sir. @tylerwinklevoss

About time! I wonder why it took so long :thinking: I wonder no more LFG !!!

I like the parameters a lot too although I’ll leave that up to Ms. @Alex_BertoG

2 Likes

I’m happy to see this proposal come through, thanks @tylerwinklevoss :slight_smile:

Since I proposed GUSD last year, liquidity and market cap have improved significantly. With a few months of successful operations and improving market conditions I think it makes sense to grant collateral support for GUSD.

3 Likes

I’m not the risk evaluation guy Tyler, but heres where I would like to see improvement before being in on this: on chain liquidity.

If a loan has to be liquidated to repay gusd, that needs to happen within a single transaction. I’m not part of the liquidation squad so they may be able to speak more eloquently to it, but right now, most of GUSD liquidity is on Curve, not elsewhere. Which is fine if you want to use Machta or something, but one of the important features for borrowers within AAVE V2 is the ability to repay a loan with existing collateral in one transaction via a flash loan.

Currently those flashloans are restricted to Uniswap, which… realistically if you’re trying to repay a loan with collateral, on some level you know you pushed the risk too high and have to deal with slippage. However, a -2% depth of 14k on Uniswap just isn’t good enough even with that understanding (assumes coingecko is accurate).

That said, that’s my only real concern. No issues with the coin itself, just the on chain liquidity available outside of Curve.