Galaxy-Backed Gyroscope’s ‘All-Weather’ Decentralized Stablecoin Goes Live on Ethereum Mainnet

Gyroscope’s GYD novel stablecoin went live on the Ethereum mainnet after testing on Polygon.

Venture capital firms Galaxy, Placeholder and Maven 11 invested in the project.

Gyroscope’s “all-weather” stablecoin gyro dollar (GYD), which aims to keep crypto investors shielded from stablecoin failures, went live Thursday on the Ethereum (ETH) mainnet, the developer team told CoinDesk.

“GYD is a means to protect against the risks of holding stablecoins, putting risk control on autopilot,” the team said in an interview via email.

Stablecoins, in spite of their name, have been known to veer from their price anchors. In March, Circle’s USDC, the second-largest stablecoin, temporarily depegged due to the collapse of banking partner Silicon Valley Bank (SVB). This in turn led Maker’s DAI to drop, as a large part of that stablecoin’s reserve assets were in USDC. Last year, the dramatic collapse of Terra’s algorithmic stablecoin UST marked the beginning of the crypto winter. Overall, large-cap fiat-backed stablecoins de-pegged from their price anchor more than 600 times this year, according to a Moody’s Analytics report from early November.

Gyroscope claims to offer an alternative to centralized and algorithmic stablecoin designs, promising to protect holders against any de-pegging events.

It’s a decentralized, non-custodial stablecoin that is fully backed by reserve assets and features an algorithmic mechanism to keep its price pegged to $1. The token was designed to segment the risks of each backing asset by storing them in segregated vaults.

Backing assets are stablecoins deployed in certain strategies such as yield-generating sDAI and USDC in Flux, and also support automated market-making (AMM) strategies like LUSD and crvUSD. As the stablecoin scales, the reserve has been designed to a large variety of strategies and assets, the Gyroscope team explained.

The token primarily targets decentralized finance (DeFi) users and features risk diversification rules, new oracle and circuit breaker systems and optimized minting and redemption bonding curves guiding the protocol on how to manage reserve assets for price stability, according to Gyroscope.

The launch followed a test period on Polygon and the opening of its liquidity pools (E-CLP), which attracted nearly $30 million in total value locked, the press release said.

The protocol raised $4.5 million in venture capital investment in a round led by Placeholder VC and Galaxy Ventures, with Archetype, Maven 11, Robot Ventures, Balancer Labs co-founder Fernando Martinelli and others participating.

“GYD is not a toy, but a stablecoin with aspirations to sit alongside Maker’s DAI in the years to come,” Chris Burniske, partner at Placeholder, said in a statement.