Gyroscope is a new stablecoin design that, like a physical gyroscope, remains stable as the surrounding environment changes. It is a revolution in stablecoin pricing, DeFi risk control, and AMM design.
The following characteristics capture the essence of its design:
- Fully-backed. In Gyroscope, every stablecoin unit is intended to be backed by 1 USD worth of collateral. The reserve stratifies risk by being made up of isolated assets; by design, reserve assets are contained and do not affect one another. At first, the reserve will be composed mostly of other stablecoins.
- Autonomous monetary policy. Gyroscope automatically monitors its own system health, adjusting liquidity and risk management according to transparent, autonomous rules. These rules define the minting/redemption prices quoted by the system and can sustain and stabilize the protocol's balance sheet in the event of shocks to the reserve.
- Resilient liquidity. Gyroscope’s reserve assets are held in vaults. The starting strategy for vaults is to deploy assets into AMMs that backstop liquidity around the current redemption system quotes. Deployed reserve assets carry yield that helps — in addition to possible revenue from protocol fees —- the Gyroscope stablecoin to recover from shocks and create a continuous upward drift on the reserve ratio.