Gemini plans to boost GUSD stablecoin volume in MakerDAO
Gemini has presented a proposal on the MakerDAO forum to support the adoption of the Gemini dollar (GUSD) stablecoin in the MakerDAO ecosystem by paying a fixed yield on the GUSD balance in MakerDAO’s vaults.
Gemini co-founder Tyler Winklevoss submitted the proposal on September 29, announcing a 3-month marketing incentive plan starting from 1st October.
As per the Dune Analytics dashboard, the volume of the GUSD balance in the MakerDAO PSM is currently at about $24 million, which Gemini’s proposal plans to grow. PSM stands for peg stability module which is useful for maintaining DAI’s peg to the U.S. dollar. It also allows users to mint DAI by swapping any MakerDAO-accepted collateral.
As part of the scheme, the proposal explains that Gemini will pay a fixed yearly interest of 1.25% on the total GUSD in the PSM vault. The annualized fixed rate will be assessed and paid every month. The only condition of the payment is that the average GUSD balance in the vault is more than $100 million on the last day of the month. The GUSD volume in the vault ascending to $100 million implies that clients are depositing GUSD to mint DAI.
The proposal expressed that Gemini will credit MakerDAO in GUSD once every month for a three-month time frame. This incentive will need Maker to make another entity that will be issued an account with Gemini to get the payments. The know-your-customer verification processes is also applicable for the Maker entity. MakerDAO’s governance can also decide to move the funds from this entity to its treasury.
This incentive scheme will not, nonetheless, modify the administration of the GUSD-PSM vault. Thusly, Gemini won't move GUSD’s custody from the PSM vault to its own platform. “We recognize the importance of the PSM in securing Dai redemptions and we believe keeping it on-chain is the best way to fullfill that task,” the proposal stated.
CBW - External Analyst