Gemini Taps MakerDAO To Boost Adoption of Its GUSD Stablecoin
On September 29, Gemini co-founder Tyler Winklevoss published a proposed “marketing incentive” on the MakerDAO forum to drive the adoption of his stablecoin GUSD through a three-month strategic plan.
According to Tyler Winklevoss’ proposal, Gemini will pay monthly fixed annual interest of 1.25% on all the GUSD stored in MakerDAO PSM vaults, as long as the average monthly balance is at least 100 million GUSD by the end of the month.
“As we’d like GUSD usage to increase on-chain, we propose that this marketing incentive only be credited if the average monthly balance of GUSD in the PSM is greater than or equal to $100m for the month.”
This would be the latest effort of the US-based exchange to grow in the middle of the crypto winter. Recently it had to let go of over 10% of its staff to cut costs and keep a sustainable business model. The move to boost its native stablecoin comes after Binance and Circle announced different business moves seeking to promote their own tokens.
Binance and WazirX recently delisted USDC, Paxos, and TrueUSD. The exchange later converted its users’ funds into BUSD. On the other hand, Circle announced the expansion of USDC into five new blockchains to counter the effects of Binance’s influence.
Gemini Seeks to Incentivize GUSD Adoption
Currently, MarkerDAO stores approximately $24 million GUSD in the MakerDAO PSM (Peg Stability Module) vault, which is responsible for allowing users to mint DAI by exchanging any type of collateral accepted by MakerDAO. Therefore, the Winklevoss proposal seeks to incentivize GUSD adoption by increasing GUSD deposits to mint DAI.
MakerDAO will need to create a new KYC-compliant account in Gemini for GUSD to be credited.
GUSDs minted on MakerDAO vaults will not be held by Gemini so as not to disrupt DAO administration; however, they should not be moved from the MakerDAO PSM vaults.
“We recognize the importance of the PSM in securing DAI redemptions and we believe keeping it on-chain is the best way to fulfill that task.”
Winklevoss ended the statement by noting that if all goes well at the end of December, upon review of the proposal, it is possible to renew it for a new year proving Gemini’s commitment to increasing the adoption of its stablecoin.
The MakerDAO Community Responds Positively to the Proposal
The Winklevoss proposal is being well received on the MakerDAO forum, to such an extent that user ADCV, a member of MakerDAO’s Strategic Finance Core Unit, posted a chart illustrating why Gemini “is offering a very compelling incentive to hold as much of the PSM in GUSD as we can.”
Similarly, TrueMaker, a recognized protocol delegate, said that this was a great proposal and that in the future, all PSM pairs should be approached in the same way since PSM as MakerDAO’s decentralized exchange, helps maintain DAI’s 1:1 parity with the U.S. dollar.
According to MakerDAO, DAI is always over-collateralized, and “Maker Vaults always have more USD in collateral than all DAI in circulation.” Gemini’s proposal could help the protocol profit from one of its most essential features, which to date has kept it from de-pegging against the U.S. dollar.
2️⃣ Dai is always over-collateralized.
The over-collateralization is a feature for the health of the entire Maker Protocol system and the stability of Dai.
Maker Vaults always have more USD in collateral than all Dai in circulation.
— Maker (@MakerDAO) March 31, 2022
If the proposal is approved, it could lay the groundwork for other issuers of stablecoins to propose incentives that would benefit both the adoption of their currencies and the stability and improvement of the protocol.
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I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.