In today’s crypto news, there has been a lot of talk about the new dollar-pegged stablecoin founded by the Winklevoss brothers – the Gemini dollar (GUSD). This stablecoin was created in a way to regularize cryptocurrency as a mainstream asset class. However, a lot of analysts and researchers have had their say on its future.
According to one blockchain researcher named Alex Lebed, the Gemini dollar smart contract includes a provision that allows its “custodian” – to freeze any account. Lebed wrote his thoughts in the tech publication Good Audience and noted that GUSD uses an ERC20PRoxy contract that gives Gemini as its custodian a full ability to upgrade the contract once in every 48 hours. This could potentially give people behind the GUSD the power to simultaneously render all tokens non-transferrable.
Even though Cameron and Tyler Winklevoss repeatedly touted GUSD as the first “trusted and regulated digital representation of the US dollar,” it is not surprising that Gemini could have included a mechanism to allow it to freeze funds.
The Gemini dollar whitepaper, however, argues that issuing a cryptocurrency which is tied to physical assets stored in a centralized location involves some element of trust. As the paper outlines:
“Desirable outcomes in a system that relies (at least in part) on trust requires oversight. In the context of a stablecoin, we submit that the issuer must be licensed and subject to regulatory supervision. From this, transparency and examination become requirements of the system, ensuring its integrity and engendering market confidence…. Gemini operates under the direct supervision and regulatory authority of the New York State Department of Financial Services and is subject to the New York Banking Law and other applicable U.S. laws and regulations.”
However, according to the NYFDS, Gemini and Paxos (the two new stablecoins) must:
“Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent the Gemini Dollar or Paxos Standard Token from being used in connection with money laundering or terrorist financing.”
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“The first one is that it can support multiple collateral types. This, of course, means ERC-20 tokens. It also means Bitcoin through WBTC. A range of cross-chain assets that are emerging now. Also, there will be other stablecoins. Centralized stablecoins that already exist on the Ethereum blockchain. But most importantly, security tokens.”The MakerDAO foundation initially owned all of its MKR tokens but as Rune explained, they sold them off to multiple huge players in the EthereMum world in order to fund teams of 100 people. He says that MKR exists only to be able to vote in the system. The system rewards people who hold CDPs and when everything goes well, the MKR total supply is reduced, tokens get burned off and the value of the remaining tokens increases. Dai is extremely unique and some consider it as the real stablecoins, unlike the pegged coins. Dai is built on an open system so people who invest in cryptocurrency can access the stability of the Oracle system. Christensen also explained how real security tokens operate better in the world of traditional assets. He said:
“Security tokens are still something that is quite new. But what that really represents to Maker is the ability to now interact with real-world assets. The ability to interact with real-world finance and provide arbitrage opportunities between the traditional finance world and the tokenized world. That means that in the future the Dai will not just be backed by volatile cryptocurrencies, but things like real estate, bonds, and stocks.”The most important way to use Dai is as a stablecoin. If anything happens to the Ethereum network, there could be some negative consequences to the market but MakerDAO couldn’t get in a worse position than the one last year.
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