Algorithmic stablecoins have become fairly popular over the past few years. However, they are a little limited because they peg their value to fiat currency (ie. USD), which is a little boring. It also goes against the idea that cryptocurrency should be a self-sustaining environment.
A new class of algorithmic coins have emerged that do not peg their value to fiat currency. Instead, they peg their value to cryptocurrencies. The first one emerged on the Fantom Network and it’s called Tomb Finance. A lot of Tomb Finance forks have appeared on different blockchains since the launch of Tomb Finance.
Anyway, this article will cover one of the Tomb Finance forks called Gaur Money, which is a Tomb Finance fork on Cronos.
What is Gaur Money?
As mentioned previously, Gaur Money is a Tomb Finance fork on the Cronos blockchain. The project was launched on April 2, 2022 by an anonymous founder (typical).
It’s an algorithmic coin that is pegged to the value of ETH at a 1000:1 ratio.
For those that don’t know, an algorithmic coin adjusts its circulating supply in order to change the price of the token. As an example, if the price rises, then the circulating supply of the tokens would increase in order to drive the price down to the peg.
This mechanism is done by allowing users to redeem bonds for $GAUR only when the peg is exceeded. The opposite is true when the price is under the peg – users are incentivized to purchase $GAUR in order to purchase $GBOND that can be exchanged for $GAUR at a bonus when the peg is exceeded.
The stated goal of Gaur Money is to become the primary medium of exchange on Cronos, which is an ambitious goal.
Now, Gaur Money is a little more than just an algorithmic stablecoin. It also has a yield farm component to it that allows investors to earn money by staking their tokens or purchasing bonds.
We would guess that most people interested in Gaur Money are simply in it to make money, which is fine. The project still needs to provide some higher goal to not look like a blatant cash grab.
The next section will go into detail about how it’s possible to turn a profit with Gaur Money.
How To Profit Off Gaur Money
You will not profit off Gaur Money by simply buying $GAUR – it’s pegged to the value of Ether. If you want to invest in Ether, then you should just purchase it.
It’s still possible to make fairly good returns with Gaur Money due to some financial tools offered on the protocol, though.
Note: This is not financial advice. Cryptocurrency is risky and it’s very easy to lose all your money. Do your own research before placing your money into anything.
$GAUR Goes Over The Peg
Making money when $GAUR goes over the peg is a lot simpler than when $GAUR drops under the peg. But it does require a few more steps. A rough outline would be the following:
- Provide liquidity to the $GAUR-ETH pool.
- Stake the $GAUR-$ETH LP tokens in the farm to earn $GSHARE.
- Stake the $GSHARE in the boardroom to earn $GAUR as long as the $GAUR is over the peg.
- Sell the $GAUR for a profit.
- You can swap half the $GAUR for $ETH and reinvest the rest to compound your profits. Taking profits is always a good idea.
That’s a pretty decent strategy for earning money when $GAUR goes over the peg. It’s also possible to earn a profit when $GAUR goes below the $ETH peg.
$GAUR Drops Below The Peg
- Buy $GAUR.
- This helps push the value above the peg.
- Swap $GAUR for $GBOND.
- Swap $GBOND for $ETH when the price of $GAUR goes over the peg.
- This is recommended because there’s a bonus for swapping $GBOND when $GAUR goes above the peg.
- Swap $GAUR for $ETH.
- This should be a profit.
This method involves less steps, but it’s a little more risky because $GAUR may not go above the peg.
Our Problem With Gaur Money
We have one main problem with Gaur Money – there’s no actual need for this project.
There isn’t really an Ether shortage on Cronos because there’s already a wrapped version of Ether on Cronos.
This means there’s literally no purpose to Gaur Money.
The project will likely collapse in about a year once all the apes pull their $ETH out of the project. It can’t really sustain itself unless it continuously adds more $ETH to the treasury.
Our other issue with this project is what exactly happens when the price drops below the peg?
Users have to hold $GBONDs and hope the price rises above the peg.
This is a lot different from other algorithmic stablecoins like DAI and UST that allow users to immediately burn their DAI or UST for ETH or LUNA (can be sold, which will drop the price of ETH or LUNA) respectively.
Gaur does not have that mechanism. Instead, investors have to hope that burning tokens will raise the price, but this is not the case. There has to be some actual demand for the tokens for the price to rise.
Gaur Money seems to have left that out of the equation.
Is Gaur Money a Good Investment?
It’s certainly possible to make money with Gaur Money in the short term. However, it’s not a project that will last a very long time.
History has shown that projects like this fail. We can look at Midas Dollar, Empty Set Dollar, and Basic Cash as examples. They used pretty much the exact same mechanism and all failed in spectacular fashion.
We also are not fans of forked projects on different blockchains. They tend to be scammers simply copying a winning idea from one blockchain to another. This is evident with something like OlympusDAO – all the forks failed and then OlympusDAO eventually failed.
To summarize, Gaur Money is a Tomb Finance fork on Cronos. It appears to be either a money grab at best or a rug pull at worst.
It’s an unsustainable model for a stablecoin. And we expect this project to collapse within a year. It is still possible to make money with it in the short term, but you must understand the risk and not hold it for too long.