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Introduction

To help answer some of the general DeFi/Stablecoin related questions as well as questions focusing on GSUcoin, we have compiled a list for you. If you have any additional questions, please join us on Discord. We are here to help and learn together!

  • What is a stablecoin?
    Stablecoins are a type of cryptocurrency asset of which the envisioned target price is pegged to a more stable reference of a value. An example of rate reference could be a fiat currency such as $USD, €EUR or it could be a commodity like gold (XAU).
  • How does a stablecoin work?
    Stablecoins aim to maintain a stable price. They are not stable in their nature. They are as volatile as any other asset. The main difference is that they have an envisioned target price upon which they base their initial exchange rate/price. Some stablecoins and their stability is maintained by holding an equivalent amount of the underlying asset in reserve, which is hopefully held in an audited and transparent manner. Other protocols maintain their peg via different stability mechanisms and incentives, while the user’s deposits / collateral is left untouched and without the access of anyone besides the owner of those.
  • What is a DeFi?
    Decentralized finance is a set of protocols and applications built on top of a blockchain network that enable users to access and interact with financial services in a completely decentralized manner. DeFi services include lending, borrowing, derivatives trading, asset management, and more. These protocols are usually permissionless and open-source, allowing anyone to access them without the need for any centralized intermediaries, making the services more affordable for users.
  • What are the benefits of using a DeFi?
    Decentralized finance makes financial products and services more inclusive, accessible to anyone with an internet connection, regardless of their location, wealth or credit score. A tool for banking the unbanked. It also eliminates the need for intermediaries. Speed and access to lending assets in much more increased which decreases friction and creates greater market liquidity. Immutability of transactions recorded onto the blockchain is making the system more open, transparent and auditable.
  • How do I utilize a stablecoin in DeFi?
    For a regular person in crypto financial world the use of these asset referenced tokens act as a safe haven through stability and overall maintaining of purchasing power in an open, decentralized and permissionless interactions with different DeFi protocols in time of increased market volatility. - use it as a peer-to-peer medium of exchange - users can establish savings account - provide liquidity on decentralizes exchanges - on/off ramp to and from crypto - blockchain based games
  • What are the risks associated with using a stablecoin?
    Stablecoins are designed to maintain a stable value, but their value can still fluctuate without stability mechanisms in order due to factors such as supply and demand. While stablecoins may be able to bypass some of the more restrictive regulations that apply to cryptocurrencies, they are still subject to other laws and regulations. As any other digital assets, stablecoins too are vulnerable to hacking and other cyber-attacks.
  • Is GSUcoin pegged to US dollar?
    No. GSUcoin is pegged to GSU exchange rate.
  • Is GSUcoin an algorithmic stablecoin?
    No. GSUcoin is issued via overcollateralized debt position created in GSU Protocol. We do not have a pre-programmed supply that is matching the asset demand. Users issue GSUcoins themself and pay back the loans to withdraw the underlying collateral.
  • How is GSUcoin different from a regular stablecoin?
    Most of the stablecoins present on the market are $USD pegged (≈99%). We find this trend to be quite risky when we are looking at the market trying to diversify the risk of a single point of value determination dependency while ensuring crypto market integrity. The GSU exchange rate is calculated on plurality of economic data and exhibits the world’s most stable behavior across fiat or crypto rates. From national level as a starting point to award a global center of exchange rate gravity. Find more here. The GSU | Protocol is issuing the first GSU soft-pegged stablecoin that optimally reduces volatility and the risk of disorderly exchange-rate movement through a proven price stability system. GSUcoin is fully censorship resistant, decentralized and built on top of battle-tested system providing users with security and unprecedented stability.
  • What stability mechanism does a GSUcoin have?
    Every user looking to generate GSUcoin have to provide a higher amount of collateral than the amount of GSUc withdrawn. This provides with redeemability just like in the times of gold-standard, but unlike the central banks, GSU Protocol does not print coins out of thin air. - Target price (GSUcoin is pegged to GSU rate with a guaranteed redemption in case of ES) - Overcollateralization (always more ETH locked than the amount of GSUc issues) - Automatic liquidations of risky vaults (when GSUc is paid back, it burns – decreasing the supply) - Arbitrage on the open market makes it possible to acquire cheaper GSUc to repay debt or mint more GSUc to sell on the open market (GSU Protocol always grants the exchange at the current rate) - Stability fee adjustments coordinated by GSU Protocol governance to incentivize creation or repayment of GSUc
  • What are the advantages of using a GSUcoin compared to other stablecoins?
    GSUcoin offers a more stable alternative to traditional $USD pegging. GSU is the first exchange rate system outperforming the stability of any fiat or crypto currency. It suggests a proportional stability shared equally between everybody, instead of one party taking on the exchange rate losses. It will strengthen the crypt ecosystem and reduce the influence of $USD inflation. It is important to keep in mind that the full custody is assumed at the user. GSU Protocol has no ability to access the user funds for any purpose. The funds deposited are sole property of the user and can be accessed by the user only.
  • What is the potential impact of GSUcoin in other DeFi protocols?
    As with other stablecoins GSUcoin enable investors to create yield on the crypto assets while maintaining the value of the underlying assets in times of high market volatility. They could be utilized in savings accounts, money market funds or bonds as well as offering liquidity to other DeFi markets. The difference with GSUcoin compared to other ($USD) stablecoins is that not one entity will bear the loss of the exchange rate difference when trading back to the local currency. This loss will be equally distributed due to the unprecedented stability of the GSU rate on a global scale. This applies to all the users of whose local currency is not $USD but they have no other option on the stable market to trade against, simply use for store of value or a medium of exchange.
  • How is the security of a GSU Protocol ensured?
    One of the incentives for the protocol governance to up-keep the protocol and keep the collateral ratios in order is to participate in the debt auctions. If the protocol dips below the assumed collateral levels due to extreme market volatility, the protocol will issue more governance tokens and sell them on open market to cover for the bad debt. This will of course dilute the supply of the governance tokens depreciating in the value acting as a disincentive for such behavior. The security of the protocol is insured via emergency shutdown that can be triggered which essentially halts the whole protocol in case of extreme market volatility or a zero-day vulnerability discovered. This will allow all users to withdraw their collateral at the price feed obtained by the frozen rate of the oracles halted. In case of emergency this system is triggered and followed by redeployment of the contracts after the issue has been addressed for the continuation of the protocol functions. GSU Protocol is build on top of a fork of MakerDAO system which has been battle-tested for many years. We are putting efforts into making sure that the system is secure and will follow up with future security/audit exercises we will conduct.
  • How is GSU Protocol governed?
    We are putting our efforts into providing users with assurance of system security, through accepting censorship resistant collateral only, integrating with reliable partners and coordinating in a progressively more decentralized way.
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