GUSD

Gold-pegged Stablecoin

What Is GUSD?

GUSD is stablecoin pegged to $1.00. You can mint it by depositing collateral or through the Peg Stability Module using USDC. The system maintains the $1.00 peg through multiple mechanisms including collateral-backed loans and direct USDC conversion.

Borrowing Against Your Assets

Supported Collateral:

• GR tokens - Up to 85% loan-to-value ratio (LTV)

• SUI - Up to 50% loan-to-value ratio (LTV)

• Other assets can be added through governance votes

How it works:

1. Deposit your collateral into the smart contract

2. System validates collateral value against current LTV limits

3. GUSD gets minted to your wallet based on the maximum borrowing capacity

4. Your debt position gets tracked with real-time health monitoring

Loan-to-Value Limits: The LTV ratios determine how much you can borrow against each asset type. GR tokens have the highest LTV at 85% because they're backed by gold reserves, while SUI has a more conservative 50% limit due to higher volatility.

Repaying Your Debt

Full repayment: Return all your GUSD plus any stability fees, get all your collateral back.

Partial repayment: Pay back any amount you want. The system calculates fees on what you're repaying and releases collateral proportionally. The rest of your debt continues.

Stability fees vary based on GUSD market conditions and are applied at repayment time.

Health Factor and Liquidation Risk

Your Health Factor determines liquidation risk:

Health Factor = (Total Collateral Value × Weighted Liquidation Threshold) / Total Debt Value

Liquidation thresholds by asset:

• GR tokens: 95% threshold (highest safety margin)

• SUI: 60% threshold (higher risk due to volatility)

Risk Classification:

Health Factor Range	Risk Level	Status
> 1.25	Safe	Green
1.10 - 1.25	Warning	Yellow
1.05 - 1.10	Danger	Orange
1.01 - 1.05	High Risk	Red
≤ 1.00	Liquidation	Critical

For multi-collateral positions, the system calculates a weighted average threshold based on the value of each asset type.

Liquidation Process

Liquidation triggers when Health Factor drops below 1.0:

Liquidation mechanics:

• Liquidators can purchase up to 50% of collateral per transaction

• 2-block waiting period between liquidation attempts

• Liquidators burn GUSD to pay debt and receive collateral at a discount

• Discount rates vary by collateral type to incentivize liquidation

Liquidation protections:

• Partial liquidation limits prevent complete position loss in single transaction

• Oracle price delays (3-block minimum) prevent flash loan manipulation

• Gas price caps during high volatility periods

• Whitelisted liquidator network during extreme market conditions

Backstop liquidation:

• Insurance Fund activates if positions remain underwater >1 hour

• Executes liquidation at market price without discount as last resort

GUSD Peg Stability Module

The Peg Stability Module (PSM) provides direct GUSD↔USDC conversion to maintain the $1.00 peg.

Single Asset Vault:

• USDC-only pool - simplified single-asset design

• Direct 1:1 mapping - no complex multi-asset management

• Immediate conversion - no waiting periods or complex calculations

Minting Process (USDC → GUSD):

1. Deposit USDC into the PSM vault

2. System mints GUSD 1:1 instantly

3. Zero fees on minting to encourage GUSD creation

4. USDC remains in vault as backing

Redemption Process (GUSD → USDC):

1. Submit GUSD for redemption

2. System burns the GUSD

3. Withdraw equivalent USDC from vault

4. 0.3% fee deducted from output USDC

5. Fee destination: Direct transfer to team address

Vault Funding:

• User deposits only - vault funded entirely by users exchanging USDC for GUSD

• No external funding - no protocol subsidies or team contributions

• Self-sustaining - vault grows and shrinks based on user demand

This creates a direct arbitrage mechanism: when GUSD trades below $1.00, users can buy it on the market and redeem it for $0.997 worth of USDC (after fees). When GUSD trades above $1.00, users can mint it with USDC and sell it on the market for profit.

Emergency Protections

Global Settlement: Governance can activate emergency shutdown during extreme market conditions. All stability fees are settled before proportional collateral distribution to users.

The system combines collateral-backed stability with direct USDC convertibility to maintain GUSD's $1.00 peg through multiple layers of economic incentives.