Circle and Binance are moving their pieces to win the stablecoin race. Gemini doesn’t want to be left behind.
On September 29, Gemini co-founder Tyler Winklevoss published a proposed “marketing incentive” on the MakerDAO forum to drive adoption of his stablecoin GUSD through a three-way strategic plan. month.
As suggested by Tyler Winklevoss, Gemini will pay a fixed monthly interest of 1.25% on all GUSD stored in MakerDAO PSM vaults, as long as the average monthly balance is at least 100 million GUSD at the end of the month. .
“Since we want GUSD usage to increase on-chain, we propose that this marketing incentive be credited only if the average monthly balance of GUSD in PSM is greater than or equal to $100 million for the month.”
This will be the latest attempt by the US-based exchange to grow in the midst of crypto winter. Recently, the company had to cut more than 10% of staff to cut costs and maintain a sustainable business model. The move to boost its native stablecoin comes after Binance and Circle announced various business moves to promote their own tokens.
Binance and WazirX recently delisted USDC, Paxos, and TrueUSD. The exchange then converted the user’s funds into BUSD. Circle, on the other hand, announced the expansion of USDC into five new blockchains to counter the effects of Binance’s influence.
Gemini seeks to encourage adoption of GUSD
Currently, MarkerDAO stores approximately $24 million GUSD in the MakerDAO PSM (Peg Stability Module) vault, which is responsible for allowing users to withdraw DAI by exchanging any collateral accepted by MakerDAO. Thus, the Winklevoss proposal seeks to incentivize GUSD adoption by increasing GUSD deposits for DAI minting.
MakerDAO will need to create a new KYC compliant account in Gemini to credit GUSD.
The GUSD minted on the MakerDAO vault will not be held by Gemini so as not to disrupt the management of the DAO; however, they should not be moved from MakerDAO PSM vaults.
“We recognize the importance of PSM in securing DAI redemption and we believe that maintaining it on-chain is the best way to accomplish that task.”
Winklevoss concluded the statement by noting that if all goes well by the end of December, after reviewing the proposal, a possible extension of the proposal for a new year demonstrates Gemini’s commitment to increasing stablecoin adoption mine.
MakerDAO community responds positively to Proposal
Winklevoss’ proposal is being well received on the MakerDAO forum, to the point that user ADCV, a member of MakerDAO’s Strategic Finance Core Unit, posted a chart illustrating why Gemini “is doing offers a very attractive incentive to hold as much PSM in GUSD as we can. “
Gemini’s Proposal to Increase GUSD Adoption in MakerDAO’s PSM
Similarly, TrueMaker, a recognized protocol delegate, says that this is a great proposition and that in the future, all PSM pairs should be approached in the same way as PSM is a decentralized exchange. of MakerDAO, which maintains a 1:1 equivalence of DAI to the US dollar.
According to MakerDAO, DAI is always overcollateralized, and “The Maker Vault has always had more USD in collateral than all the DAI in circulation.” Gemini’s proposal could help the protocol profit from one of its most important features, which has so far kept it from arbitrage against the US dollar.
2️⃣ Dai is always over-collateralized.
Over-securitization is a feature to the health of the entire Maker Protocol system and Dai stability.
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 form the basis for other stablecoin issuers to propose incentives that benefit both the adoption of their coin as well as the stability and improvement of the protocol.