The Gemini Dollar (GUSD) is a regulated stablecoin issued by Gemini Trust Company, designed to maintain a 1:1 peg with the US dollar. As an ERC-20 token on the Ethereum blockchain, GUSD combines the stability of fiat currency with the efficiency of decentralized finance (DeFi).
How Gemini Dollar Works
Cash-Collateralized Stability
Each GUSD is backed 1:1 by USD reserves held in Gemini-controlled accounts, ensuring redeemability at parity ($1 = 1 GUSD). These reserves comprise:
- 45% Bank deposits at US-regulated institutions
- 5% Money market funds
- 50% Short-term US Treasury bills
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Smart Contract Architecture
Gemini’s multi-layered smart contract system enhances security:
- Proxy Layer: Controls token transfers and emergency freeze functions.
- Implement Layer: Executes contract logic.
- Store Layer: Manages user balances and transaction history.
Use Cases for GUSD
Centralized & Decentralized Finance
- Trading: Hedge against crypto volatility on CEXs like Gemini.
- DeFi Protocols: Earn interest via lending platforms (e.g., Aave) or provide liquidity on DEXs like Uniswap.
- Cross-Border Transfers: Settle payments globally with minimal fees.
Transparency Measures
- Monthly Audits: Independent firm BPM verifies reserves.
- Proof of Reserves: Publicly accessible via Gemini’s Trust Center.
Key Features of GUSD
| Feature | Detail |
|---------|--------|
| Issuer | Gemini Trust Company (NYDFS-regulated) |
| Blockchain | Ethereum (ERC-20) |
| Collateral | 100% USD-backed |
| Redemption | 1:1 for USD via Gemini platform |
FAQ: Gemini Dollar Explained
Is GUSD safer than other stablecoins?
Yes. As a NYDFS-approved stablecoin with transparent audits, GUSD avoids the opacity risks associated with unregulated alternatives.
Can I earn interest on GUSD?
Absolutely! Stake GUSD in DeFi protocols like Aave or use Gemini Earn for yield opportunities.
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How does Gemini mint/burn GUSD?
Gemini exclusively controls supply:
- Minting: New GUSD issued when users deposit USD.
- Burning: GUSD destroyed upon USD withdrawals.
Why Choose GUSD?
- Regulatory Compliance: First stablecoin approved by NYDFS.
- Full Reserve Backing: No fractional reserves—unlike some competitors.
- Ethereum Compatibility: Seamless integration with Web3 apps.
With its robust infrastructure and transparent operations, GUSD sets a benchmark for trustworthy stablecoins in crypto markets.