Gyroscope is a decentralized finance (DeFi) protocol built on Ethereum that combines a stablecoin, Gyro Dollars (GYD), with a system of automated market makers (AMMs) called Concentrated Liquidity Pools (CLPs). ^[1] The protocol aims to provide a resilient and capital-efficient infrastructure for stablecoin liquidity by integrating automated stability mechanisms, diversified reserve management, and advanced liquidity pool designs to maintain the GYD peg. ^[2]​

Overview

Gyroscope was developed to address the complexities and capital inefficiencies associated with liquidity provision in DeFi. ^[1] The protocol is a non-custodial liquidity system centered on two primary components that work synergistically: the GYD stablecoin and its Concentrated Liquidity Pools (CLPs). The CLPs, particularly the Elliptic Concentrated Liquidity Pools (E-CLPs), are designed to asymmetrically concentrate liquidity to improve capital efficiency and reduce the need for active management. ^[2]​

The protocol issues a fully backed stablecoin, Gyro Dollars (GYD), which is supported by a diversified "all-weather" reserve. Stability is maintained through automated diversification rules, bonding-curve-based minting and redemption, and oracle and circuit-breaker protections. The E-CLPs help maintain GYD’s liquidity, while GYD reserves can use E-CLP positions as yield-bearing collateral. This creates a reinforcing cycle where reserve deployment deepens liquidity, which in turn encourages trading activity and generates fees for the protocol and its liquidity providers. The protocol is governed by holders of the GYFI token. FTL Labs is the core development company behind the Gyroscope protocol. ^{[3] [4]}​

Technology and Products

Gyroscope's technology is built around its stablecoin, GYD, a yield-bearing version, sGYD, and a suite of specialized AMMs known as Concentrated Liquidity Pools (CLPs).

Gyro Dollar (GYD) Stablecoin

Gyro Dollar (GYD) is the native stablecoin of the Gyroscope protocol, designed to be fully backed and maintain a 1:1 peg with the U.S. dollar. The protocol aims for a long-term reserve ratio of 100%, where every GYD is collateralized by at least one dollar's worth of assets in its reserve. ^[6]​

The following video provides a live look at the Gyroscope stablecoin, GYD.

Gyroscope Stablecoin GYD Live

Backing and Reserves

GYD is backed by a diversified "all-weather" reserve, a basket of protocol-controlled assets structured to mitigate a wide range of risks, including censorship, regulatory, counterparty, oracle, and governance risks. Initially, this reserve is composed primarily of other stablecoins. The goal of this diversification is to ensure full collateralization is the default state of the protocol. ^[6]​

Stability Mechanisms

The protocol employs a multi-layered system called the Dynamic Stability Mechanism (DSM) to maintain GYD's peg. ^[2]​

• Arbitrage Loop: Under normal market conditions, the protocol's mint and redeem functions create an arbitrage loop. If GYD trades above 1 and sell it on the open market for a profit, increasing supply and pushing the price down. If GYD trades below 1 worth of reserve assets, creating buy pressure that pushes the price up. ^[6]
• Autonomous Pricing and Circuit Breakers: If a market shock leads to under-collateralization, the protocol's autonomous pricing mechanism provides decreasing redemption prices as redemptions increase. This functions as a circuit breaker to disincentivize bank runs and reward users who wait for conditions to stabilize. The redemption price is designed to autonomously recover toward the $1 peg as outflows slow or the reserve value recovers. ^{[7] [6]}
• Recapitalization: As a final line of defense, the reserves can be recapitalized through the auctioning of GYFI governance tokens. The governance framework is designed to use these auctions proactively to build buffers rather than only as a last resort. ^[6]

sGYD (Staked Gyro Dollar)

sGYD is the yield-bearing version of the GYD stablecoin, implemented as a standard ERC-4626 vault. Users can deposit GYD into the sGYD vault to earn yield generated from the protocol's reserves. The exchange rate between GYD and sGYD increases over time as yield accumulates, meaning the sGYD token itself is non-rebasing. sGYD is transferable and can be integrated into other DeFi protocols. Liquidity providers in designated Balancer pools can also earn reserve yield by staking their LP tokens in a gauge, where GYD is accrued as a reward. Access to sGYD is restricted in some jurisdictions, including the United States and the United Kingdom. ^[8]​

Concentrated Liquidity Pools (CLPs)

Gyroscope's CLPs are a suite of AMMs designed for high capital efficiency by concentrating liquidity within specific price ranges. Most of the protocol's reserve assets are intended to be deployed into these pools to generate fees and deepen liquidity. These pools are integrated with Balancer's architecture for optimized trade routing. ^[9]​

The following video provides an explanation of Gyroscope's CLP technology.

Gyroscope's Concentrated Liquidity Pools - Explanation Video

2-CLPs (Quadratic CLPs)

2-CLPs are two-asset AMMs that concentrate liquidity within a predefined price range by using "virtual reserves" to simulate the depth of a larger pool. This approach flattens the pricing curve and reduces price impact for trades within the active range. Designed as a simplified, single-range variant of a Uniswap v3 position, 2-CLPs aim for higher capital efficiency and lower gas usage. The risks associated with 2-CLPs include smart contract vulnerabilities, strategy risk when prices move outside the selected range, and adverse selection during sudden price shifts. ^[10]​

3-CLPs (Cubic CLPs)

3-CLPs extend the concentrated liquidity model to three assets, using virtual reserves and a symmetric pricing parameter to contain trading within a coordinated, multi-dimensional "feasible pricing region" across all asset pairs. This design increases capital efficiency relative to using multiple 2-CLPs and reduces gas costs for multi-asset routing. These pools carry risks similar to 2-CLPs, with additional exposure from having more price pairs and the potential for the pool to consolidate into the least valuable of the three assets. ^[11]​

E-CLPs (Elliptic CLPs)

E-CLPs introduce an elliptical pricing curve that allows concentrated liquidity to be shaped asymmetrically. This gives pool designers fine-grained control over where liquidity is placed, such as clustering depth around a stablecoin's peg while tapering it off in less relevant price regions. This flexibility is particularly useful for GYD trading pools, as the curve can be truncated outside the known minting and redemption prices to avoid wasting capital. The design can be over 75% more capital-efficient than traditional StableSwap pools. These advantages come with standard AMM risks, which are intensified by the experimental nature of the mechanism. ^[12]​

Dynamic CLPs

Dynamic CLPs add a conditional, oracle-driven rate-update mechanism to existing CLP designs. This allows a pool to automatically shift its price range when the market moves out of bounds, enabling it to remain an active venue for volatile pairs like ETH/BTC/USD without manual repositioning. A permissioned "keeper" role controls when updates occur, gating them behind oracle checks and other parameters to protect against manipulation. While this design allows for harvesting volatility in wide-range pools, it introduces risks. Liquidity shifts during updates can lock in losses if they occur at unfavorable prices, and LPs are exposed to strategy risk from the pool's dynamic behavior and timing risk from delays in keeper execution. ^[7]​

Rehype CLPs (Rehypothecation E-CLPs)

Rehype E-CLPs extend the E-CLP design by combining asymmetric liquidity placement with automatic rehypothecation into external lending markets like Aave. This structure allows LPs to earn swap fees, lending yields, and token incentives from a single position. Rather than using complex stacked architectures, Rehype pools deposit assets like aUSDC directly at the pool-asset level. This design aggregates decentralized yield sources for GYD liquidity. It introduces the usual E-CLP risks alongside rehypothecation risk from the underlying lending protocols, such as liquidity, insolvency, oracle, and governance risks. ^[13]​

Governance

Gyroscope’s governance is managed through a permissionless, on-chain system on Ethereum Mainnet where protocol decisions are made by stakeholders. ^[14]​

The following video provides an explanation of the Gyroscope governance system.

Gyroscope's Governance System - Explanation Video

Participants and Process

Governance participants include GYFI token holders, GYD liquidity providers, early community contributors, designated expert "councillors," and other DAOs. Voting can be done directly or via delegation. Protocol-level changes move through a process of proposal, forum discussion, and an on-chain vote. Quorum and approval thresholds are calibrated to the risk level of each action. Once a proposal passes, it enters a timelock period before execution, giving the community time to review the update before it takes effect. ^[14]​

GYFI Token

GYFI is the governance token for the Gyroscope protocol. Its primary utility is for staking to obtain voting power. The token has a fixed total supply of 13.7 million. ^{[15] [3]}​

Tokenomics and Allocation

A 2% annual inflation rate for GYFI is scheduled to begin in March 2029. The token supply is allocated 65% to the community and 35% to FTL Labs and its investors. ^[15] The detailed breakdown is as follows:

• DAO Treasury: 32.29%
• FTL Labs: 30.53%
• DAO Initial Airdrop: 15.27%
• DAO Gyroscope Foundation: 15.00%
• FTL Labs SAFT Purchasers: 4.47%
• DAO Initial Services Providers: 2.43%

The official contract addresses for the GYFI token are:

• Ethereum: 0x70c4430f9d98b4184a4ef3e44ce10c320a8b7383
• Base: 0xc63529297dE076eB15fcbE873AE9136E446cFbB9 ^[15]

Initial Airdrop

The initial airdrop converted "SPIN" points earned by early community members into GYFI, based on a snapshot taken on March 14, 2025. Recipients could claim their tokens on the Base network and choose between fully liquid tokens or time-locked options that offered a larger GYFI allocation in exchange for delayed unlocks. A nine-month lockup offered a 40% boost, while an eighteen-month lockup offered a 150% boost. Larger allocations were subject to an additional vesting layer. ^[15]​

Partnerships and Integrations

Gyroscope has established partnerships and integrations with several key protocols and organizations in the DeFi ecosystem, including Aave, Aura Finance, Balancer, Karpatkey, Polygon, Rocket Pool, Spark, and Tellor. Other integrations include routing and swap aggregators such as 1inch, KyberSwap, Paraswap, and 0x. ^{[5] [3]}​