The Gemini Dollar (GUSD) is a stablecoin pegged to and backed by US dollars held in FDIC-insured bank accounts. The funds held in reserves are routinely audited by the accounting firm, BPM LLP.
GUSD was created by cryptocurrency exchange Gemini, which was founded by Cameron and Tyler Winklevoss in 2014. Gemini received approval from the New York Department of Financial Services (NYDFS) to launch its stablecoin in 2018. The company has claimed that GUSD is the first regulated stablecoin, though Paxos also launched a NYDFS regulated stablecoin the same day. The Gemini Trust Company LLC holds USD deposits that correspond to the number of tokens in circulation.
The Gemini Dollar is an ERC20 token built atop the Ethereum network, and its smart contracts are audited by security company Trail of Bits Inc.
Vision
The Winklevoss brothers have said that the Gemini dollar is intended to bridge the divide between the traditional finance sector and the crypto industry. The brothers have sought to set their stablecoin apart from others by emphasizing that it is regulated by the NYDFS.
Launch and Issuance
The Gemini Dollar launched in September 2018, with the Gemini Trust Company as the sole issuer. Gemini holds the US dollar reserves that back its stablecoin in Boston’s State Street Bank. The currency is insured through an FDIC deposit insurance program. Registered customers are able to convert USD into Gemini Dollars and deposit them to an ethereum address, while Gemini adjusts their holdings to correspond to the number of tokens in circulation.
The Gemini Dollar is built on Ethereum, meaning token creation is the result of executable smart contracts. The contract responsible for increasing the supply must be signed by an online key up to a certain limit. To mint coins beyond that limit, an offline signature is required. This is intended to increase the security of token issuance.
Network and Security
Smart contract execution requires a multisignature scheme of approval for “high-risk action,” which includes an offline signature for added fault tolerance. After approval, these particular actions are time-locked for a period of detection or response to security incidents. Any pending actions can be revoked to avoid malicious actors.
Monetary Policy
The Gemini dollar does not have a set circulation schedule or hard cap on supply. It is pegged to the US dollar with a reserve backing the token 1:1.
Transaction Processing
Gemini dollars are created at the time of withdrawal from the Gemini platform and are transferable to any ethereum address the user specifies. The US dollar amount of Gemini Dollars is debited from a customer’s account upon withdrawal, and credited at the time of deposit. There are zero fees charged to users when buying or selling GUSD tokens on Gemini’s native exchange. However, Ethereum gas fees will apply once tokens are migrated off its platform.
