Hi Aave community!
I recently submitted an application to onboard Gemini’s GUSD stablecoin as a collateral asset to the MakerDAO protocol. I think that GUSD could also be a worthy addition to Aave.
Some details about GUSD:
GUSD is issued by Gemini Trust Company, LLC, a New York state based trust company. The fiat USD corresponding to issued GUSD is held by State Street Bank and Trust Company (NYSE:STT). Monthly accounting examinations are performed by BPM, LLP. GUSD was launched in September 2018 and for a time was one of the largest stablecoins with over $100M circulating at its peak. The circulating supply of GUSD has since declined as it was dwarfed by USDC, USDT and other stablecoins with wider trading and defi usage. The supply of GUSD is currently ~$10.5M, having grown from a trough of ~$4M at the end of 2019.
Source Code: https://github.com/gemini/dollar
GUSD token contract: https://etherscan.io/token/0x056fd409e1d7a124bd7017459dfea2f387b6d5cd
Accountant’s reports at bottom of page: https://gemini.com/dollar#reports
Trail of bits contract audit: https://gemini.com/static/dollar/gemini-dollar-trailofbits-audit.pdf
GUSD can be exchanged for USD at a fixed 1:1 rate on the Gemini exchange. I have personally tested this out and was impressed with the results: withdraw of GUSD from Gemini exchange was sent within 1 minute using fast gas, and deposit back into Gemini was credited within ~17 block confirmation. It should be possible for liquidators (who are willing/able to KYC) to flip GUSD collateral directly through Gemini for the time being. GUSD also has a few trading pairs on other centralized exchanges such as OKEx, HitBTC, and ZB. I plan on submitting a proposal to create a GUSD Curve pool in the near future as well, if this is supported by veCRV voters the on-chain liquidity for GUSD should improve substantially.
Benefits for Aave:
- Diversification of centralized assets: GUSD relies on a different issuer and custodian compared to USDC, TUSD, USDT, or BUSD. Credit, custody, or regulatory risks may be less correlated across these assets, which could reduce risk to Aave security module stakers.
- New DeFi on/off ramp: Gemini has good linkage with US bank wire and ACH networks, comparable to Coinbase as a fiat ramp.
While Coinbase have played nice so far, it’s dominance in regulated crypto liquidity and USDC on/off ramp has huge influence over the space. I see Gemini and GUSD as a viable competitor. From an industrial economics standpoint, Aave and other Defi protocols like Maker may benefit from breaking down monopolies of their key counter-parties.
++ onboarding proposals for Curve and Compound
From a personal perspective, I’m in total support.
While I may be bias as a Gemini user, when I think of the two top US exchanges (that are staying ahead, working with regulators, and institutions), I mostly think Coinbase & Gemini, however as you said, even though Coinbase has played nice so far it’s dominance in this space has a huge influence over things, especially with its growing USDC.
Because of that, it would be nice to see support for GUSD slowly kick off in some places, including Aave. Current support for GUSD outside of Gemini is virtually none in my experience.
As for the risk aspect or legal side, that’s a whole different world to me that I can’t comment on, but the benefits you mention are definitely notable as well.
Thanks @monet-supply and @defidude for your support. Happy to answer any other questions anyone might have. Thanks.
From a _ perspective there are a couple of interesting discussion points:
Gemini has a solid reputation and they’re currently one of leaders explaining DeFi to the traditional financial world (based out of NY, well established, well regulated, etc).
Giving Gemini more exposure within Aave is likely a win for all sides – but it should be noted this is a massive expansion opportunity for Gemini as GUSD has a significantly smaller market cap than other stablecoins on the platform. GUSD is also under-represented outside of the Gemini ecosystem – something that I’m sure they’re keen to expand.
For reference, here are the current stablecoins supported by Aave (by market size):
- USDT: $13.4B
- USDC: $1.5B
- DAI: $450M
- TUSD: $340M
- BUSD: $190M
- SUSD: $95M
- GUSD: $11M
Given the growth Aave is able to provide for GUSD, it seems reasonable to ask how Gemini can provide growth for Aave
We’ve identified a handful of key areas where overlap between Gemini & Aave could be mutually beneficial (there’s likely more, pls add to this list!):
- Providing liquidity to Aave money markets
- Aave money market integrations
- Listing AAVE and aTokens on Gemini
- Aave governance participation
The synergies between a protocol for money market creation, a centralised stablecoin & a highly reputable exchange opens the door for a number of long-term partnerships. This thread represents the first step in a possible value exchange between the two ecosystems.
I support this proposal.
I would also like to ask the twins to list Aave token on Gemini after migration from Lend token gets completed and support more DeFi tokens on their exchange @tylerwinklevoss
Thanks for your support and sharing your thoughts. I am a fan of collaborations being a two-way street and agree, as you note, that there are many ways Gemini and Aave can work together to grow both ecosystems. If we’re going to build a true bridge between the mainland of finance and Aave, there are more components than Aave simply supporting our stablecoin. Thank you for sharing your ideas on how both ecosystems can work more closely together. We look forward to exploring them with the Aave community.
Thanks for your support and sharing your request. Please see my response to @James
In support gUSD market size is fairly small so risk against the system will be low
@tylerwinklevoss - great to see the announcement today
Glad you enjoyed the news! It was a very exciting day for Gemini, we are very proud as a team to be supporting this fantastic project and making AAVE available for trading and custody on Gemini. Here’s to continuing to explore ways of working together and the many more exciting days ahead! Onward and upward!
Updates on GUSD decentralized exchange liquidity:
Curve has added support for GUSD and total pool liquidity is currently ~$4 million. This translates to less than 0.1% slippage on a $100,000 trade.
Two pools have also been created and funded on Balancer, each with around $1 million of total liquidity.
The first pool is 33% GUSD / 33% WETH / 33% WBTC:
Second pool is ~50% GUSD, and 7.15% each to YFI, UNI, BAL, SNX, UMA, CRV, and REN:
I’m in support of this proposal. Gemini is a leader in the digital currency space and having this asset on the Aave platform would surely add value to the whole Aave product ecosystem. In general, I’m in favor of having battle tested stablecoins listed as assets on the Aave marketplace.
Hi @tylerwinklevoss, @monet-supply,
The Risk Team has applied Aave’s Risk Framework to GUSD leading to an overall risk rating of B-
GUSD is issued by Gemini Trust Company. It has been created for practical use in innovative applications, among which to facilitate Gemini’s institutional solutions and exchange operations.
GUSD Smart contract Risk: C+
GUSD was launched in September 2018 – at the same time then USDC – yet it has only experienced 120k blockchain transactions.
The GUSD smart contract only supports 2 decimals meaning that interest accrual can only occur for more than 1 cent.
USDC Counterparty Risk: C+ cannot use as collateral (centralisation D-)
As it is backed by real US dollars, GUSD is centralised. Moreover it has few holders with most of the transactions off-chain on the centralised Gemini environment.
An independent accountant’s audit report is published at the end of each month on the website. GUSD is regulated bringing trust to the token. Still, the infrastructure is based on the Ethereum blockchain where regulators have little power.
GUSD Market Risk: B -
GUSD has a small market capitalisation at less than 20m with a small trading volume. The price has diverged from 1 a few times in the last 3 months with up to 3% price variation.
Risk Parameters ~ BUSD sUSD
Not a collateral
Reserve Factor 10%
Variable Interest Rate Model ~ BUSD sUSD
GUSD implemented successfully with AIP-6 proposal into the Aave Protocol. Liquidity currently been around 1 mm USD worth. Congrats everyone and thanks @monet-supply and everyone for the discussions.