Goosie changes the rules for De-Fi. Here are some genuine FAQs I am getting as I share the protocol with others. If you have a particular question not covered please contact me.
Is goosie a platform that allows me preserve the current market value of the deposited crypto in exchange for minted goosies?
- You mint your own goosie based on the value of the collateral deposited in the smart contract. In other words you make a loan to yourself that gives you instant liquidity. Because goosie coins are pegged to the value of gold, if the value of your collateral (e.g. BTC) falls, you have already secured a portion of the purchase value with the goosie minted - that portion of your asset purchase has become risk free.
If market value increases more goosies are minted but if the crypto declines the goosie value is pegged against the original crypto value, is that correct?
- Yes. If the market value of the collateral increases goosies are automatically minted by the protocol. If the value of your collateral falls there is no margin call. You already own the goosie that have been minted at the higher value.
How are there no margin calls? How are "goosie" pegged to gold?
There are no margin calls because goosie are loans you make to yourself. Why would you ask for more collateral from yourself? Why would you liquidate your loan when your collateral was down so you took a hefty loss?
If the value of your collateral falls below a certain level one might expect a need for a margin call in order to maintain the peg of goosie to gold. In derivative products such as EFT’s full collateralisation is necessary because the EFT derives its value from the underlying assets. However for goosie this is not necessary.
To begin with goosie are massively over-collateralised. It would take a hefty fall in the market for collateral to fall below 100% of the goosie on issue.
More importantly full collateralisation is not what maintains the gold peg. What counts is the value at which goosie are deterministically issued and withdrawn from circulation (burnt) by the smart contract. This is what determines the price at which goosie trade at.
The smart contract always mints new goosie against collateral deposited at 100 goosie = 1 oz of gold. It is in no one’s interest to sell their new-minted goosie for less than this price. This is particularly true because each man and woman that self-mints goosie knows they will have to burn the same number of goosie in order to release their collateral. If anyone sold their goosie at less than the pegged price they would in effect be imposing a tax on their asset as they know they will need to buy them back at the pegged value to release their collateral.
If goosie do fall off their peg this immediately presents a risk-free arbitrage opportunity for traders to purchase the under-valued goosie and sell them back to the market at the pegged price. As the peg is restored the opportunity disappears.
The unconditional commitment by the smart contract to mint and burn goosie at the pegged value is the same way the US dollar peg to gold was held at $20.67 per ounce until 31st January 1934 and at $35 per ounce after that until August 15th 1971. The value of the peg changed in the two periods, the way the peg was maintained did not.
I’m assuming the goosies are a tangible digital currency, or do I need to change them into Fiat if I want to buy a 160k vehicle for example.
- Yes, goosie are a tangible digital currency. Their value is pegged to the value of gold. You will be able to trade them on crypto exchanges or convert to fiat.
Whom stands the losses if the Crypto market crashes, it there is 100 million dollars of crypto invested in goosies and the market crashes by 40%?
- In this scenario your crypto has gone down 40% but you still own the goosies you have minted against it. They have not gone down because they are pegged to the value of gold. So you still have money to spend in the down periods. (This solves a key problem for my wife and I, liquidity in down markets.)
Your messing with my brain, I was always of the assumption that what goes up must come down and somebody has to pay back the defecit.
- That is the beauty of the design - a self-loan so no margin call, and pegging gossie to the value of gold. One way to look at it is that you run a deficit as the value of your collateral falls. This is shown by the fact that to release your collateral you need to burn the number of goosie that have been issued against it. So if you did this when your collateral was down you would realise the full loss. However, as there is no margin call on what is a self-loan, you don't have to do this. Instead you can just ride out the price drop of your collateral with the goosie already minted until the asset value recovers.