When crypto exchange Gemini launched its much lauded stablecoin in 2018, it hoped the market would view its dollar-pegged coin as a regulated and more trustworthy alternative to Tether.
Still, things got off to a slow start, with GUSD lagging behind its competitors. Gemini dollar currently has $90.3M in circulation while Paxos has $132.2M and USDC has $287.2M. To spur adoption, Gemini offered their Gemini dollar to some over-the-counter trading desks at a 2% discount – meaning each $1 token could be bought for 98 cents. However, traders spotted an arbitrage opportunity in the deal where they could buy the discounted GUSD and then exchange it for PAX, Paxos’ stable coin, at the full dollar price – pocketing the 2% difference.