Two in one: a review of Gemini Dollar (GUSD)

Exploring GeminiDollar (GUSD): Its Creators and Purpose

In September 2018, the New York Department of Financial Services (NYDFS) approved the issuance of Gemini Dollar (GUSD). This was one of the first stablecoins backed by USD to receive regulatory support.

GUSD serves as the native token of the Gemini cryptocurrency exchange, established in 2014 by the Winklevoss twins, Tyler and Cameron Winklevoss, who are not only American investors but also professional rowers. Both brothers hold bachelor's degrees in economics from Harvard and MBAs from the business school at Oxford University.

The Winklevoss twins have stated that their goal in creating Gemini Dollar was to provide liquidity for users who want to send or receive US dollars over the Ethereum network.

The Gemini dollar is part of our mission to build the future of money … It is the missing link between the traditional banking system and the crypto economy,

said Tyler Winklevoss in an official company press release.

How Gemini Dollar works

GUSD is an ERC-20 token that has been created based on the Ethereum blockchain. The smart contracts of Gemini Dollar undergo security audits conducted by Trail of Bits Inc.

The deposits that back GUSD are actually held by Gemini Trust Company LLC in the Boston-based State Street Bank. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for these deposits. 

Gemini Trust Company performs a monthly audit of its banking assets as part of its routine procedures. This is carried out by BPM Accounting and Consulting, an independent auditing firm based in San Francisco. Moreover, BPM conducts additional checks on the trust's assets on a random day every month, providing an extra layer of security and accountability.

Not only is Gemini's stablecoin GUSD useful in the digital economy for buying digital art, trading, investing, and providing liquidity, but the company also offers a clever solution for its US customers: the Gemini Credit Card. With this card, users can earn cashback of 1-3% on their everyday purchases. 

Gemini Dollar price fluctuations in 2018-2023

Source: CoinMarketCap

Gemini Dollar tokenomics

There is no limit or issuance schedule for Gemini Dollar. GUSD is created on the Gemini platform and can be transferred to any Ethereum address. Gemini Dollar is credited to the client's account upon depositing USD. 

When buying or selling GUSD within the Gemini app, there is no fee charged to users. However, there may be a gas fee charged when transferring the stablecoin off the Ethereum platform.

Gemini Dollar market cap in 2018-2023

Source: CoinMarketCap

Gemini Dollar's rivals

On the very same day that the Gemini Dollar was released, the New York Department of Financial Services granted permission for blockchain startup Paxos to issue a stablecoin. In collaboration with the cryptocurrency exchange Binance, Paxos launched the BUSD coin, also backed by the US dollar. These two new coins entered into competition with Tether, Dai, and other stablecoins in the market.

It is worth noting that in mid-February 2023, the US Securities and Exchange Commission (SEC) sent a Wells notice to Paxos regarding its operation of BUSD and potential violations of investor protection laws. Furthermore, Paxos has become the subject of an investigation by the NYDFS. This demonstrates that initial regulatory approval does not necessarily guarantee the absence of issues during the development of a cryptocurrency project.

As of the end of March 2023, GUSD held the 8th position among other stablecoins and the 73rd position in the overall cryptocurrency rankings in terms of market capitalization. 

TOP-8 stablecoins by market capitalization

Source: CoinMarketCap

• The market capitalization of GUSD (as of the end of the first quarter of 2023) was over $611 million.
• GUSD issuance exceeds 611 million.
• More than 607 million GUSD are now in circulation.