This summary is for informational purposes only. It is neither a stablecoin guide, nor a risk assessment, nor investment advice! It is not intended to substitute for the advice of licensed professionals. Gnosis believes that the information is accurate as of the date of publication. No warranty of accuracy is given, and no liability for any error or omission is accepted by Gnosis Ltd. and/ or its affiliates.
In the introduction to Gnosis Protocol, we explained the basic premises of how the protocol works. Now, we'd like to illustrate a potential use case through providing liquidity for stablecoins, while making use of their fluctuation around 1 USD.
USD stablecoins are crypto tokens with the purpose of providing a low volatility asset by being roughly pegged to 1 USD. In practice, stablecoins are not always exactly 1 USD, but fluctuate around 1 USD with varying discrepancy. You could exploit this spread by creating standing orders on Gnosis Protocol.
This strategy could be put into action through a dapp built on Gnosis Protocol, but also executed purely on the smart contract level. Check out the next section for a basic summary on this simple liquidity provision concept.