In today's world, the need for a stable exchange rate system that serves everyone equally is more critical than ever. The traditional exchange rate system, which relies on the US dollar as the sole point of value determination, has created a dependency on a single national currency. This dependency has led to a volatile market, affecting international trade and cross-border activities. It has also created long-lasting consequences, such as the risk of currency-peg controlled by a central bank.
The good news is that the DeFi space has seen explosive growth in innovative and experimental projects addressing this issue. The MakerDAO protocol set the tone for the DeFi space by issuing a crypto collateralized stablecoin (DAI), which is soft-pegged to the US dollar, providing a hedge against volatility while sustaining an unbiased and decentralized currency that can be accessed and used by anyone, anywhere, anytime.
But the question remains: can we create a more equitable financial ecosystem that doesn't rely on a single point of value determination? The answer is yes, and the Global Point of Balance (GSU) is here to prove it.
The GSU is a new type of balanced exchange rate that provides stability for everyone equally. It is based on the plurality of actual underlying data and not just a single-factor pricing model operating directly between two parties. The GSU is based on bilateral trade volume and capital flows between countries, providing a stable basis for cross-border activities and international payments.
The GSU's calculations are based on the analysis of volatility measurements of over 80% of global trade volume across 30+ largest nations and their ∼35 largest trading partners, which corresponds to ∼1000 most important trade relations in the world, generated and updated continuously to calculate the price as the function of the unit in real time.
The GSU system continuously monitors changes to the worldwide center of exchange rate gravity as capital flows between any two countries change and the value of their currencies fluctuate. It is updated on an ongoing basis, so that it maintains its stabilizing function, simultaneously publishing the right rates in a progressively decentralized way.
Unlike the traditional exchange rate system, the GSU does not rely on only two parties agreeing to the price, nor on a central bank determining a certain price. Instead, it is based on a massive collection of relevant data and continuous processing and publishing of the rate in real-time.
The GSU is more stable because it reflects actual underlying economic activities between countries and currencies. It is not based on direct agreements between two banks, brokers, or exchanges, nor is it a rigid currency-peg controlled by a central bank. Instead, it optimally reduces volatility and the risk for disorderly exchange-rate movement, making it the world's least-fluctuating unit of exchange, outperforming the US dollar and any other fiat or crypto currency today.
Using the GSU soft-peg can reduce exchange-rate risk and associated costs by more than 50% globally. This has been empirically and academically documented.
The GSU offers a more stable alternative to traditional USD pegging. It is the first exchange rate system outperforming the stability of any fiat currency. It suggests a proportional stability shared equally between everybody, strengthening the crypto ecosystem, and protecting against inflation. The GSU is a groundbreaking solution to the problem of volatility, providing stability for everyone equally.
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