The Gemini cryptocurrency exchange, founded by the Winklevoss twins, announced on Monday that the company has launched a stablecoin built on the ERC-20 standard. Named “Gemini Dollar” (GUSD) the coin’s value will be “strictly pegged 1:1 to the U.S. dollar,” according to the whitepaper. Of course, many stablecoins exist that are pegged to USD, such as Tether (USDT) and Dai (DAI), though some pegs are reserve-based and other are algorithmic.
The technical specifications for Gemini coin are a large factor for improving trust, and below we will take a deep dive into the token’s whitepaper.
Gemini tokens and the amount in circulation can be viewed by the public on the Ethereum blockchain. An independent accounting firm will be retained to perform regular, full audits of the Gemini Trust Company to ensure that the tokens have the dollars to back them.
The blockchain will verify the overall supply of coins, while a third-party auditing firm will verify dollar amounts in accordance with auditing laws.
Gemini dollars are created on the blockchain whenever customers withdraw tokenized dollars from the Gemini exchange. They are destroyed or “redeemed” whenever users deposit them in their Gemini accounts.
Withdrawals can be sent to and stored on any Ethereum address as part of the ERC-20 protocol. The Gemini token retains all features in the ERC-20 protocol, namely smart contracts.
As the whitepaper states, Gemini wants to retain strict control over the token so that they can perform any upgrades. Gemini wants to:
- Resolve vulnerabilities;
- Extend the system with new features;
- Improve the system and optimize its operational efficiency; and
- Pause, block, or reverse token transfers in response to a security incident (i.e., catastrophic event) or if legally obligated or compelled to do so by a court of law or other governmental body.
They do this by laying smart contracts that perform different functions. The “Proxy” layer controls the rights for creating and transferring coins. As an assumption, this Proxy layer allows an easier mechanism to halt coin trading and issuance if there is a security incident. The Proxy acts as a governing layer for who and what can take place on the blockchain and execute the smart contract logic contain in the Impl layer.
The middle layer, called “Impl” (most likely an abbreviation for “implementation” ), contains the data and logic for smart contracts, whether that’s creating new tokens or transferring them under certain conditions. The Impl layer has smart contract features similar to most ERC-20 tokens. However, the idea is that the smart contract features only work assuming the Proxy has allowed the right to execute them.
The final smart contract layer is the actual ledger, called the “Store.” This layer maps token owners to their balances and serves as “the external and eternal Gemini dollar ledger.” This is where the public can view the ledger for Gemini coin transactions.
As a developer, the way I picture the smart contract layers is much like a web stack. The Proxy is the local server that allows files to execute. If the webmaster doesn’t want a file to execute anymore, they would remove it from the server. The files, or the “Impl” layer, need to store data in a database so it can be retrieved later at any time. The database is the “Store” of the essential information that is generated by the file’s logic.