In February 2022, the Geminon protocol was born with an ambitious objective: to create a deflationary stablecoin pegged to the US CPI, called USDI. As we developed the technology required to achieve this goal, we uncovered its potential to drive new advances in the world of decentralized finance (DeFi), enhancing and refining some of the most popular existing projects. Today, we are thrilled to present Geminon v2, a comprehensive redesign of our protocol that includes significant improvements and innovative features.
Introduction
When the first Geminon whitepaper was released in April 2022, our focus was on a deflationary stablecoin with an algorithmic design that was partially collateralized. Drawing inspiration from Terra and Frax, we sought to develop a system that integrated the benefits of both while mitigating their limitations. However, the collapse of Terra in May 2022 prompted us to reevaluate our approach, ultimately leading us to adopt a fully collateralized stablecoin model. This new design ingeniously blended the strengths of fully collateralized and algorithmic systems while minimizing their drawbacks.
Although this redesign process resulted in a substantial delay in our development timeline, it proved to be a boon in the long run. It was this critical pivot that catalyzed our research and development of technologies that would eventually culminate in Geminon v2.
Our final Geminon stablecoin protocol employed a fully collateralized elastic supply token (GEX) to algorithmically stabilize the deflationary currency (USDI). The adaptive nature of GEX’s elastic supply facilitated the minting of stablecoins by reducing volatility in response to changes in collateral level, while full collateralization aimed to prevent bank run scenarios like the one experienced by Terra.
To ensure the security of collateral and the effective management of GEX’s supply, we devised a custom-designed pool called the Genesis Liquidity Pool (GLP). Through extensive testing, it became evident that this innovative pool held immense potential for various applications in DeFi, particularly as a foundation for a decentralized exchange (DEX). This revelation inspired the development of Geminon v2.
In parallel, we also created a new type of price oracle based on adaptive exponential smoothing, which demonstrated superior performance compared to existing algorithms such as TWAP in our tests. The cutting-edge technologies we developed enabled us to offer a comprehensive suite of stablecoins representing the world’s major Forex markets and to introduce Geminon’s fourth groundbreaking innovation: the decentralized Foreign Exchange (ForDEX). ForDEX permits the swapping of any pair of Geminon stablecoins without slippage, a feat made possible by our state-of-the-art oracles that protect decentralized Forex pairs from being front-run.
Join us as we embark on this exciting journey with Geminon v2, pushing the boundaries of DeFi and shaping the future of stablecoin technology.
Improvements
As is the case with many major DeFi projects, the first iteration of the Geminon protocol wasn’t the best possible version. The complexity and accelerated development timeline necessitated a modular structure for the contracts. While this approach facilitated rapid deployment, it presented certain drawbacks that became apparent during the final development phase. With Geminon v2, we aim to enhance the protocol’s architecture by focusing on the following areas:
- Gas Optimization.
- Integration.
- Simplicity.
- Security.
- Decentralization.
- Usability.
- Standardization.
These enhancements provide a strong foundation for Geminon v2’s development. In the next section, we will explore the groundbreaking features that further set Geminon v2 apart as a pioneering force in the DeFi landscape.
New features
Geminon v2 builds upon its initial focus on stablecoins to innovate in three core DeFi areas: decentralized exchange, lending, and stablecoins. This change in scope brings immediate benefits, such as increasing the use cases for the GEX token and altering the stablecoin collateralization model. The key features incorporated into Geminon v2 include:
1) Decentralized Exchange (DEX)
Geminon v2’s DEX leverages the Genesis Liquidity Pools (GLPs) technology to create a concentrated liquidity model, as opposed to the fragmented liquidity model popularized by Uniswap. This model offers numerous advantages, including:
- One-side liquidity
- Reduced slippage
- Decreased impermanent loss
- Gas savings
- Fee savings
- Lower deployment cost
Additionally, the Geminon DEX introduces new features thanks to GLPs:
- Custom liquidity curve
- Liquidity bootstrapping
- Cross-chain swaps
- Variable fees
- Flash loans
- Built-in price oracle
- Permissionless pools
These features position the Geminon DEX to potentially become a future reference in the DeFi space, providing improved service and profitability for both traders and liquidity providers.
2) Stablecoins
Geminon v2 introduces major advances in the field of stablecoins, with a redesigned collateralization system aimed at setting new standards in decentralization, security, and scalability. Key features of the new system include:
- Segmented liquidity: Geminon v2 moves from a shared collateral model to an owned collateral model, assigning individual collateral to each stablecoin holder. This addresses issues of panic among holders and improves stablecoin stability.
- Custom collateralization: Users can choose their own collateral as long as their position is fully collateralized, turning Geminon v2 into a meta-issuer of stablecoins.
- Yield on collateral: Unlike other collateralized stablecoin projects that charge interest on issued currency, Geminon v2 users receive interest on the stablecoins they issue.
- Censorship-resistant collateral: Geminon v2 uses wrapped assets from the W-project instead of centralized stablecoins, promoting decentralization and avoiding censorship or government sanctions.
- Multilevel collateralization: Geminon v2 employs multiple levels of collateralization for enhanced security, including public collateral pools, reserve deposits, and GEX token redemptions.
Existing functionalities, such as decentralized Forex exchange and a full range of global stablecoins, will continue to be available alongside these innovative features.
3) Lending
Geminon v2’s lending and borrowing protocol presents noteworthy advancements in architecture, efficiency, and risk management, setting it apart from other DeFi lending platforms. Key benefits of the Geminon v2 lending protocol include:
- Integration: The lending feature is deeply integrated with the rest of the protocol, providing unparalleled capital efficiency, liquidity, and new yield generation strategies.
- Efficient Liquidation: The integration also enables a highly efficient settlement mechanism, increasing the potential for leverage in the lending protocol.
- Risk Management: The integrated architecture allows for the execution of complex risk management strategies in conjunction with other protocol functions, ensuring more secure lending and borrowing.
- Cross-chain Loans: Leveraging the multi-chain capabilities of Geminon v2, the lending protocol enables loans across different blockchains, offering an alternative way to bridge assets between chains and expanding the reach of the lending ecosystem.
These features set Geminon v2 apart in the DeFi lending space, showcasing a commitment to efficiency, integration, and effective risk management for users.
Beyond v2
Geminon v2’s incredible features not only make it stand out in the DeFi landscape but also serve as the foundation for a more significant mission: facilitating the mass adoption of decentralized finance by individuals, businesses, and institutions.
To achieve broad public adoption, Geminon aims to create a full-stack DeFi protocol that is reliable and safe, allowing for the development of an ecosystem of fintech applications focusing on three main areas:
- Decentralized Non-Custodial Banking: Current attempts to offer financial services to retailers have mainly depended on wallets or centralized custodial services. Geminon envisions using smart contracts based on the new ERC-4337 standard to create true decentralized online banking applications, enabling instant, private, non-custodial transactions at near-zero cost.
- Financial Services for Businesses: Companies have more stringent requirements for financial management, particularly in compliance. Geminon aims to develop applications that meet these needs while upholding decentralization and non-custodial service principles through the use of smart contracts.
- Supply Chain and International Trade: Blockchain technology has immense potential in international supply chains, but there are few highly visible projects in this area. Geminon, with its decentralized Forex settlement platform and custom collateralized stablecoins, can bring significant value to this field. Additionally, the integration of NFT technology for settling letters of credit in international goods transport presents another exciting opportunity.
Geminon firmly believes that within five years, digital currencies will play a dominant role in providing these services. By leveraging the account abstraction feature (ERC-4337), Geminon’s goal is to be one of the first market players to offer these services at scale, driving mass adoption of decentralized finance.
Conclusion
In conclusion, Geminon v2 revolutionizes the DeFi space by significantly expanding its original protocol to encompass the three core DeFi primitives: decentralized exchange, stablecoins, and lending.
For the decentralized exchange, Geminon v2 adopts a concentrated liquidity system, offering substantial benefits over prevailing fragmented liquidity systems. Coupled with the innovative GLP technology, Geminon v2’s DEX has the potential to outperform existing benchmark protocols for both traders and liquidity providers.
The redesigned stablecoin protocol embraces a fully decentralized overcollateralization model, where each user becomes a currency issuer, maintaining ownership of collateral, determining its composition, and earning returns on their capital. The protocol provides the framework and additional security layers, acting as a central bank guaranteeing the solvency of other decentralized banks within the system.
Geminon v2 also introduces an integrated lending protocol designed not only to offer lending services but also to expand and enhance the capabilities of other primitives, leading to improved liquidity, capital efficiency, and yield generation opportunities.
Lastly, the long-term vision for Geminon v2 revolves around achieving mass adoption by building an ecosystem of decentralized fintech applications for individuals, businesses, and institutions. By leveraging the account abstraction feature of the new ERC-4337 standard, Geminon v2 aims to be at the forefront of this DeFi revolution, delivering unprecedented value and reshaping the future of finance.
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