Introducing Gold Standard DAO v2
By close observations over the last 4 months we have gathered very valuable data for us to design an A grade defi product. We are thrilled to finally share what we have been hard at work creating. Gold Standard DAO brings gold back to the future.
Inspired by Alchemix, the Gold Standard DAO is designed to offer synthetic tokens backed by future yield in Gold.
Gold Standard DAO is a DeFi protocol that allows for the creation of synthetic tokens that represent the future yield of a deposit. It enables users to retrieve near instant tokenized value against temporary deposits of stablecoins. In addition to this it opens a door to decentralised yield in gold. The protocol presents a powerful new DeFi design offering new possibilities for users.
How it Works:
The Gold Standard DAO protocol will be launched with a synthetic derivative, “gsAUX,” (synthetic gold) which will be mintable using USDC (other stablecoins to follow). To mint gsAUX, users deposit USDC into the Gold Standard DAO smart contract via our hosted UI and can then mint gsAUX, up to 50% the deposited amount of USDC at the market equivalent of Gold. The deposited USDC is deployed to yearn vaults to earn yield. Yield then gets converted to gold, this gold is used to back the synthetic gold (gsAUX).
Gold Standard DAO is full of possibilities… your funds aren’t imprisoned in some mediaeval way.
Once deposited, funds are committed to earning yield paid in gold, which will eventually, automatically pay back user debt. There are however several ways in which a user can choose to manage their loan:
Option 1: leave their deposit to continually earn yield, allowing them to periodically draw down their loan collateral.
Option 2: repay the loan early using gsAUX or AUX, allowing them to withdraw their collateral.
Option 3: liquidate their loan using part of their collateral to repay the loan and allow them to withdraw whatever is remaining.
What can you do with gsAUX?
Like many other ERC20 tokens, gsAUX is tradeable and experiences price fluctuations. This opens up an array of opportunities for the savvy investor such as farming to earn governance tokens (GSD). We’ve speculated about some use cases at the bottom of this article for your entertainment.
Enter the Transmuter
Users can send their gsAUX to the transmuter which will queue it for conversion back to AUX and other stablecoins. At this point you may be mistaken for believing that the genius of Gold Standard DAO has indeed conjured a recipe for creating free money.
The Transmutation process however does take time, relying on other ecosystem dynamics to determine its speed.
How gsAUX is pegged to AUX:
There are several governance-minimised pegging mechanisms built into the protocol itself:
- Transmutation from gsAUX to AUX:
Yearn vault yield is periodically collected and deposited into the transmutation pool. Each time yield is sent to the transmutation pool, it is allocated proportionally to all the gsAUX staked in it. When users claim their AUX in the transmutation pool, an equal amount of gsAUX will be burned from their staking deposit.
- Staking (gsAUX-3CRV) incentive:
Staking rewards are earned in the form of GSD tokens by providing liquidity in gsAUX/AUX in curve.fi (via the permissionless crv.finance dapp), and then staked in the Gold Standard DAO protocol. This adds deep liquidity for gsAUX, enabling frictionless transfer of value, resulting in minimal price impact on the gsAUX token.
- Early settlement of user deposits:
Debt can be repaid at any time with AUX and/or gsAUX. For example, John has 1000 AUX of debt in the system, and he sees that gsAUX is cheap at 0.9 AUX. Bob can buy 1000 gsAUX off the market at a discount and settle his debt with gsAUX, which the protocol always treats as equal value to AUX. Doing so would save John money and his act of buying gsAUX would help to restore it to its peg. The opposite is also true. If gsAUX is over the peg, Bob could sell his gsAUX for AUX, allowing him to settle his debt at a discount.
This system is designed to piggyback off stable assets so users aren’t affected by ridiculous price swings. On the other hand it uses the yield from those stable assets to buy gold, resulting in yield paid in gold.
In addition to this the protocol offers self repaying loans, giving you access to future yield in gold.
Because the protocol acts as a buying machine, it creates markets for gold. When gold has good trading volume (which the protocol is contributing to), opportunities in the defi ecosystem increase for that asset. The Gold Standard DAO team will be working on expanding and harnessing these opportunities for gold for it’s members.
New website & Litepaper: Soon™
All shall prosper!