The concentrated liquidity in the S-AMMs, made possible by Gyroscope's P-AMM design, makes Gyro Dollar liquidity exceptional in the stablecoin space. For this reason, we see a natural use case as a trading hub asset. Like USDT predominantly today, we expect many low slippage trades will be made possible by connecting through Gyro Dollar S-AMMs within the Balancer v2 trading ecosystem, where we are developing the first S-AMMs today. Early liquidity provision on the S-AMMs at launch can be bootstrapped using liquidity farming.
The exceptional Gyro Dollar liquidity and stability also makes Gyro Dollars an ideal collateral for use in other DeFi protocols. For instance, protocols with liquidations can incorporate the observable P-AMM redemption price as a floor on the liquidation value when adapting risk parameters. Further, the boosted S-AMM liquidity means that liquidations are likely to be settled at much better rates. Altogether, this means that collateral can be used more efficiently.
While the system is healthy and the reserve is generating good yield, parts of that yield may be passed on to Gyro Dollar holders in the form of an interest rate (like Dai's DSR).
While speculative usage of stablecoins is the predominant use case today, the long-term future of a successful stablecoin is in real economic usage (e.g., as a currency). Two main user groups are first adopters today.
Firstly, crypto-native businesses will be able to use Gyroscope for treasury management, without needing to rely entirely on banking infrastructure of other stablecoins with centralization risks. With first hand experience of the tribulations of trying to set up a bank account for a crypto-native business in the UK, we know that this is a real problem to be solved.
Secondly, a non-custodial, censorship resistant stablecoin will be useful for households in unstable markets and geographic regions. It provides a means for value to be stored, offering a savings alternative with a reduced prospect of sharp devaluations, and without restrictions on the movement of capital or confiscation of funds.
Gyroscope is planning a universal basic income (UBI) scheme to bootstrap early economic usage. The idea is that if you can prove that you're a unique person, you can earn a regular allotment of Gyro Dollars delivered on a Layer-2 (no high transaction fees!) that can be used in various ways. This serves to get first adopters using Gyroscope, regardless of whether they are able to provide capital of the size needed for liquidity farming. This can be supported by an early bootstrapping of the reserve at launch.
Separate from Gyro Dollars, investors can also choose to provide liquidity directly to the vaults built for the Gyroscope reserve. These vaults will automate various yield strategies in robust and secure ways. For instance, long-term vault strategies will be non-upgradeable within a given vault. And other vault strategies will be secured from governance risks using the Gyroscope governance mechanisms. Both serve to make governance attacks impossible or unprofitable.