GEX
Utility token of the Geminon protocol.
Last updated
Utility token of the Geminon protocol.
Last updated
The GEX token is the main entry point to Geminon applications. It is necessary to mint and redeem stablecoins and to pay fees. In the future it will have additional functionalities as the protocol grows.
Beyond its usefulness for users, the GEX token is a key piece of the Geminon protocol, since its fundamental mission is to dampen collateral volatility by creating a linear response to changes in the collateral level, which makes it easier to later create assets of null price response (stable) to collateral changes. If you like calculus you can think of GEX as the first derivative of a parabolic price function, and stablecoins as the second derivative.
There is no initial supply of tokens: no one, not even the team, is assigned a supply at launch. The only way to get GEX tokens is to deposit collateral in the Genesis Liquidity Pools (collateral mining). The amount of tokens in circulation and their distribution depends exclusively on the free market, the team has no control over it.
In order to fulfill its mission of buffering volatility between collateral and stablecoins, the GEX token needs to have an elastic supply. The supply is controlled by the Genesis Liquidity Pools, which are allowed to mint and burn tokens. Every time collateral is added or withdrawn from a pool, a certain number of tokens are minted or burned to ensure that the supply is always proportional to the amount of collateral.
Although the supply is not strictly limited, the token minting / burning ratio takes into account a maximum supply target of 100 million tokens, and when that value is exceeded, the minting ratio is reduced to the minimum essential to maintain the linearity of the price versus the amount of collateral.
The initial collateral composition of the GEX token is 40% gold, 30% bitcoin, and the remaining 30% in equal parts between the native currencies of the blockchains in which it operates: 10% ETH, 10% BNB and 10% AVAX.
Since decentralized versions of tokenized bitcoin exist on all three chains, it was further decided to allocate 10% of bitcoin to each chain. In this way, the weight of each chain in the custody of the collateral is 60% in Ethereum, 20% in BSC and 20% in Avalanche. This was a design choice, and the collateral composition could be changed in the future if necessary to improve the safety of the protocol.
This weight ratio could only stand on its own if users always traded GEX in the pools for those exact collateral ratios. Since this is unfeasible, the GLPs are also in charge of enforcing that the weight of the pools is always kept in the exact proportion.
To achieve this, a coefficient is applied to the supply ratio of each pool, which means that the amount of GEX tokens minted / burned is different depending on whether the value of the collateral of the pool is above or below its target value.
This asymmetry in the emissions of each pool creates arbitrage opportunities between the pools that give the market the necessary incentives to automatically keep the weights balanced.
One of the design hypotheses of Geminon's smart contracts is that at any time any protocol contract or the owner itself can act maliciously. Following this principle, all the critical functions of the protocol incorporate redundant protection mechanisms to protect themselves not only from external attacks, but also from internal attacks.
The most critical part of the GEX token contract is the mint function, that creates new supply of tokens. To prevent an attacker who gains access to this feature from minting an unlimited number of tokens and to reduce the probability of flash-loan attacks on the protocol, the contract incorporates an automatic supply rate limiter. This rate limiter uses an algorithm developed by Geminon that is able to track very accurately the 24 hours average of the supply without the need to store the value of all trades (which would make operations extremely expensive in gas terms).
The GEX supply is limited to a max of 5 million units per day, which is 5% of the target supply level of the token. In the worst case scenario, the impact of this type of attack on the protocol would be limited and could be stopped before significant damage were done.
For more detailed information on the operation of the algorithm see the following page:
GEX is a fully collateralized token and hence its supply can only be minted adding collateral to the Genesis Liquidity Pools. You can find all the info about how to obtain GEX tokens in our quick start guide: