How Does Gyroscope Work?

GYD: diversified reserve-backed stablecoin targeting 100% collateralization with basket of DeFi assets

GYD is backed by a diversified reserve of protocol-controlled assets designed to mitigate censorship, regulatory, counterparty, oracle, and governance risks. The 'all-weather' design aims to survive multiple simultaneous failure modes.

Primary-market AMM (PAMM) with algorithmic redemption pricing based on reserve ratio and outflow velocity

PAMM adjusts GYD mint/redeem prices algorithmically. When reserves fall below 100%, redemption price decreases to disincentivize bank runs. Price recovers as outflows slow or reserve assets appreciate. This is a novel anti-bank-run mechanism.

E-CLP (Elliptical Concentrated Liquidity Pools) with asymmetric depth placement using elliptical pricing curves

E-CLPs use elliptical (not rectangular) price ranges to shape liquidity asymmetrically. Designed to concentrate depth around GYD's peg while tapering elsewhere. Built on Balancer infrastructure but with novel curve mathematics.

Multiple oracle feeds for reserve asset pricing and PAMM calibration

Uses multiple oracle sources to price reserve assets accurately. Oracle failures could miscalculate reserve ratio and trigger incorrect PAMM adjustments.

GYFI governance token with fixed 13.7M supply, 2% annual inflation starting March 2029

GYFI launched March 2025 with 65% community / 35% FTL Labs split. Fixed supply with delayed inflation start. Token has experienced ~75% decline from peak, typical of governance token volatility.

sGYD staked GYD earning native yield from reserve asset returns

sGYD allows GYD holders to earn yield from the protocol's reserve asset returns. Yield depends on reserve composition and market conditions.

Protocol-controlled reserve with governance-managed asset allocation

Reserve asset allocation is managed through governance. Decisions on which assets to include in the reserve basket affect the overall risk profile of GYD.

If reserve assets are correlated (e.g., multiple stablecoins backed by the same underlying), a single failure can cascade through the entire reserve, triggering PAMM price reductions that accelerate rather than slow the bank run.

When PAMM reduces redemption price below $1, secondary market price drops further. Arbitrageurs exploit the spread, draining reserves faster than the PAMM algorithm anticipates. The anti-bank-run mechanism can paradoxically accelerate outflows.

E-CLP pools are calibrated around the expected peg. If GYD depegs beyond the elliptical range, all on-chain liquidity evaporates simultaneously, trapping holders who cannot redeem through the PAMM fast enough.

The novel elliptical curve shape creates non-standard impermanent loss profiles. LPs may not understand their risk exposure, especially at curve extremes where behavior diverges from standard concentrated liquidity pools.

Pursuing yield on reserve assets (to fund sGYD returns) requires deploying capital into DeFi protocols, introducing smart contract risk, oracle risk, and liquidity risk that can impair the reserve backing GYD.