[csomar]

> you agree Circle is free to use the funds provided for its own purposes prior to redemption subject to the terms of this Agreement.

> Circle may also invest these fiat funds in highly-liquid, AAA-rated fixed income securities.

I wrote about this here: https://omarabid.com/usd-stable-coins

Only Gemini USD is fully backed by US treasuries. Everyone else is using this money to play roulette.

[SilasX]

Yes! And it redeems on demand! But what’s perplexed me is, the Gemini dollar (GUSD) is somehow more volatile than Dai, which uses much more complex, experimental means of stabilizing its value:

https://coinmarketcap.com/currencies/multi-collateral-dai/

https://coinmarketcap.com/currencies/gemini-dollar/

[csomar]

That's economics for you! Your perception doesn't not much reality. The idea that because you can redeem at face value for 1:1 and you have stronger guarantees, then it should have a less volatile price.

In reality, it comes down to market makers and market adoption/liquidity. That's why Tether could keep the beg at 1:1 despite having very little liquid cash. Liquidity will come from investors, and actually the more the better. Smaller fish like GUSD will not have that much interest from market makers.

[SilasX]

It doesn't need interest from market makers. You want GUSD, you can buy it from Gemini at 1:1. You want to sell, they redeem at 1:1. You don't need market makers unless you want to get ripped off.