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Liquid to list Gemini dollar, a bridge between fiat and cryptocurrency

In Insights

Cryptocurrency has grown exponentially over the past decade. What started off as barely a blip on the radar in 2008 has become a multi-billion-dollar sector with more than 2,000 different cryptocurrencies being actively traded, according to Coin Market Cap.

But these cryptocurrencies suffer tremendously from market volatility and instability, far more so than traditional forex markets. As a result, individuals and institutions alike can be reluctant to enter the market.

Coins with stable value, known as stablecoins, can therefore be of great use, protecting holders from the volatility associated with cryptocurrencies and bridging the gap between the traditional and crypto markets.

Exchanging legal tender to a stablecoin is usually fast and inexpensive. In contrast, traditional financial institutions like banks charge customers high fees to send money and customers can be asked to wait for days before receiving money in a foreign account.

These reasons are why we at Quoine have decided to provide our customers with access to a regulated stablecoin. We are proud to announce the listing of the Gemini dollar (GUSD) on Liquid.

A stablecoin back by US dollars

GUSD is a stablecoin whose value is pegged to the US dollar 1-to-1. Gemini Trust Company, LLC (“Gemini”), the GUSD issuer and regulated trust company, collects no fees for exchanging legal tender for the Gemini dollar on its platform. Nor does the Gemini platform ask users to pay any fees in making remittances with the Gemini dollar.

The US dollars that correspond to GUSD are held at the State Street bank located in the United States and eligible for FDIC “pass-through” deposit insurance, subject to applicable limitations. In addition, the US dollar deposit balance will be examined monthly by an independent registered public account firm to verify the 1-to-1 peg, with the reports made publicly available. Furthermore, the smart contracts underlying the GUSD token have been fully audited and formally verified by an independent security firm, whose report is also publicly available.

A secure stablecoin

GUSD is unique because its protocol is three-layered in order to improve system security. The first layer of the protocol, Proxy, is the one users interact with when checking token balances and sending tokens. The second layer, Impl, receives the content of the operations performed on Proxy, such as checking token balances. In doing so, Impl accesses a third layer, Store, on which data is stored.

This complexity brings about a high level of security. Even if a hacker were to access the Proxy protocol and try to manipulate the GUSD network, the hacker could not automatically access the data concerning the underlying balances of the GUSD address that are stored in Store.

This is essentially like having three locked doors to your house to deter burglars.

We firmly believe that the Gemini dollar is a safe and secure bridge between markets as well as being an on-ramp for crypto enthusiasts looking for a way to enter the market.

 

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

WRITTEN BY

Ryoko Imoto

Liquid Analyst.