This week a blockchain researcher named Alex Lebed published a code review on the new stablecoin, the gemini dollar, created by the Gemini Trust cryptocurrency firm. According to Lebed’s study, gemini dollar accounts can be frozen by the exchange, and the tokens can be turned into non-transferable assets.
Also read: Markets Update: Short Term Recovery – Is a Bullish Reversal in Sight?
The Custodian Has the Ability to Freeze Gemini Dollar Accounts
The latest tether (USDT) competitor, the gemini dollar (USDG) created by the cryptocurrency exchange owners the Gemini Trust, has had a code review this week. A post written by Alex Lebed details that exchange’s new stablecoin creation has some interesting centralized features. It’s also interesting to note that Lebed is not only a blockchain researcher but also the founder of ‘Stableunit,’ another stablecoin that claims to be decentralized and offer low volatility. According to Lebed’s report, he reviewed the gemini dollar’s codebase that was created with an ethereum-based smart contract.
“Gemini USDG is a new centralized stablecoin (similar to tether) implemented as an ERC20 token on the Ethereum blockchain,” explains Lebed’s study.
The current implementation gives Gemini the ability to freeze any account or make all tokens non-transferrable. The custodian is able to completely change the implementation of the token every 48 hours.
After detailing with references on how anyone can verify his work on their own, Lebed reviews the code and replicates the results. Lebed claims the custodian of the gemini dollar smart contract can generate an “infinite amount of tokens.” Moreover, Lebed emphasizes that the custodian can easily make all the tokens non-transferable.
“This project has another single point of failure: the company — They can just say one day: ‘you know what, sorry, we don’t want to change your tokens for dollars anymore,’” Lebed states.
You think this is impossible because it’s a big company with a reputation? History has a precedent when the whole country with the largest economy in the world did this in 1971. And here we speak about just a private company which has to follow all the regulations of the US government.
‘Then It’s Not a Cryptocurrency’
Since the rise of tether, and the slew of other stablecoins released over the past few months, many other cryptocurrency firms are in the midst of creating their own stablecoin. For instance, there are at least 6-7 more stablecoin projects on the way like the Boston-based US cryptocurrency unicorn, Circle Invest, is in the midst of making a stablecoin. And then, of course, Lebed seems to be making his own decentralized version of a stable digital asset. In an update after the editorial review published, the author notes that Gemini Trust is not hiding the fact that his claims are possible in the official white paper.
“Nowadays this is considered a best practice for evolving smart-contracts, especially for the asset-backed token — And Gemini made an excellent job by explicitly mentioning that in their whitepaper,” Lebed concludes.
Of course on social media and Reddit forums, cryptocurrency proponents were quick to note that controversial Tether Limited, the company that issues tethers via the Omni Layer, also has the ability to freeze accounts. One Reddit user explains what he thinks of the gemini dollar custodian’s freezing ability saying, “then it’s not a cryptocurrency, just a database.”
What do you think about the stablecoin phenomenon? Let us know in the comment section below.
Images via Pixabay, Fandom, and the Gemini dollar logo.
Want to create your own secure cold storage paper wallet? Check our tools section.
The post Gemini Dollar Code Review Reveals the Stablecoin’s Accounts Can Be Frozen appeared first on Bitcoin News.
