Status: Deployed on Polygon, Testnet phase, Constrained parameters
“Designing an algortihmic primary market presents a challenge akin to designing a rules-based monetary policy”
Gyroscope's objective is to construct a robust public infrastructure for decentralized finance (DeFi), with a primary focus on developing a fully-backed stablecoin. This stablecoin strives for a reserve ratio of 100%, ensuring that each unit is supported by collateral worth one US dollar. The project's reserve consists of a diverse array of protocol-controlled assets, to mitigate various risks prevalent in DeFi, including price, censorship, regulatory, counterparty, oracle, and governance risks. Moreover, Gyroscope implements an autonomous price bounding mechanism, enabling the automatic adjustment of stablecoin prices for minting and redemption, aiming to maintain a tight peg while securing the project's long-term viability amidst short-term crises.
Formerly called P-AMM and can be found here PAMM Technical Paper
Stablecoin units can be minted and redeemed in the Dynamic Stability Mechanism (DSM).
The shape of the DSM (i.e., the bonding curves that quote prices to mint/ redeem) is a function of the current reserve ratio and outflows.
GYD Trading Pools concentrate the liquidity within a band that follows the minting and redemption quotes set by the DSM.
With healthy reserves, GYD Trading Pools liquidity is concentrated within a narrow band. If there is a shock to the reserve and the DSM sets new redemption prices this price band will widen.
GYD Trading Pool designs incorporate optimized bonding curve shapes and virtual reserve mechanisms.