Gyroscope has raised $4.5M in seed funding to build Gyro Dollars (GYD), a decentralized stablecoin featuring a novel all-weather stablecoin design. The round was co-led by Placeholder VC and Galaxy with participation from Maven11, Archetype, and Robot Ventures, as well as angel investment from Cyrus Younessi, Fernando Martinelli, Hart Lambur, Will Villaneuva and others. A live beta version of the new GYD stablecoin mechanism – Gyro Proto – is now live on mainnet Polygon and is open to all for testing.
A core problem facing the crypto ecosystem is that existing stablecoin designs are either economically unsound, centralized, struggle with risk diversification, and/or overly rely on leverage mechanisms that are notorious for causing instability during harsh market conditions.
Gyroscope was founded by PhDs who authored seminal papers on stablecoin design and DeFi risk including Stablecoins 2.0, the Decentralized Financial Crisis, and While Stability Lasts. The founders designed the Gyroscope Protocol, a technology for a DeFi infrastructure with a novel all-weather design approach to solve the critical issues facing stablecoins including risk, adoption, and sustainability.
“At present, DeFi is missing a decentralized non-custodial stablecoin that effectively diversifies risk. Our aim is simple: to build a non-custodial stablecoin that actually works and isn’t algorithmic. It is designed to be fully backed.” said Gyroscope co-founder, Lewis Gudgeon. “As opposed to custodial stablecoins such as USDC or USDT, Gyro Dollars are designed to offer a decentralized, non-custodial alternative with greater diversification in risk – if you care about the core value proposition of DeFi, you should want to use Gyro Dollars. At the same time, in contrast to algorithmic stablecoins which are undercollateralized by design, the Gyro Dollar is designed to be fully reserve backed. The Gyro Dollar provides a much needed new third path between centralized and algorithmic stablecoins.”
- Full Reserve Design: GYD’s reserve aims to diversify existential risks in DeFi to the greatest extent possible by requiring that risks are ‘stratified’, or isolated from each other. Losses that accrue in one system should not spill over into other connected sub-systems. Unlike existing stablecoins, GYD is set to include many dimensions of risk including geographic risk and smart contract risk.
- Dynamic Stability Mechanism: A novel mechanism to govern the minting and redemption of stablecoins.
- Concentrated Liquidity Pools: New AMM pools, including elliptic AMM pools, to allow for highly customized liquidity concentration. These have been in testing on Polygon since September and at the time of writing have been used by more than 600 different addresses with no issues reported in the smart contracts.
- New Oracle System: The Gyroscope Protocol’s new oracle system is designed from first principles to greatly harden oracle security.
- Decentralized Governance: By design, the Gyroscope Protocol requires decentralized governance, including a critical role for stablecoin holders: the protocol is set to feature a new approach to governance known as ‘Optimistic Approval’. The DAO was bootstrapped through an industry first sybil resistant game.
- For more information on the All-Weather design, please review Gyroscope’s documents and how it is different from other stablecoins.
The Gyroscope stablecoin protocol is currently live as Gyro Proto, a beta release with asset caps for testing purposes on mainnet Polygon. This version showcases critical functionality of the stablecoin design, including the diversified reserve, concentrated liquidity pools and new redundant oracle system. Gyro Proto will soon be followed by the full release of Gyroscope on Ethereum.
Early testers can join the community and provide feedback on the novel mechanisms, while other protocols can make use of the AMM pools and oracle system separately. The Gyroscope project has already gathered a vibrant governance community of early users and stakeholders.
“Gyroscope has developed a novel stability mechanism for stablecoins with its All Weather design approach that we believe can be a foundational element in the future of Stablecoins,” said Leland Lee, Investor on Galaxy’s Venture arm. “Additionally, the team’s years of academic research studying stability in financial systems primes them for innovation in DeFi protocols.”
The founding team behind Gyroscope formed a software development company FTL Labs, which comprises forerunning DeFi researchers including Ariah Klages-Mundt, Lewis Gudgeon and Daniel Perez, due to complete PhDs in the area in the next few months. The team also includes Dr Steffen Schuldenzucker, who has a PhD focussed on complexity and systemic risk in financial networks, Jonas Klemm, formerly at the ECB and Jacek Czarnecki, formerly Global Legal Counsel at the Maker Foundation.
“The Gyroscope team has some of the earliest and most thoughtful researchers in DeFi who steadfastly focused on rigorous validation of their mechanism over many years. Ariah, Lewis, Daniel, and Steffen have written some of the highest cited papers in DeFi and have brought the utmost care and detail when reasoning about protocol safety and user security. The Gyroscope protocol brings together many battle-tested ideas together in an elegant manner to expand the overall DeFi market in a safe and secure manner” — Tarun Chitra
Gyroscope is a decentralized stablecoin featuring a novel all-weather stablecoin design. The initial development team of the Gyroscope protocol is FTL Labs, comprising PhD candidates Ariah Klages-Mundt, Lewis Gudgeon and Daniel Perez, who authored seminal papers on stablecoin design and DeFi risk. FTL Labs and Gyroscope’s mission is to build robust public infrastructure for DeFi, with the central piece being a fully-backed stablecoin with all-weather reserves and autonomous price bounding. Existing stablecoin designs are either economically unsound, struggle with risk diversification, or overly rely on leverage mechanisms that are notorious for causing instability during harsh market conditions. Gyroscope’s stablecoin Gyro Dollars (GYD) was built with a novel design system to solve critical challenges in stablecoin design. For more information, please visit https://gyro.finance/ or review the documentation.