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). 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. ^[1]

Overview

Gyroscope is a non-custodial liquidity system that pairs concentrated liquidity design with stablecoin yield generation. Its architecture centers on elliptic concentrated liquidity pools (E-CLPs), which concentrate liquidity asymmetrically along an elliptical curve to improve capital efficiency, reduce the need for active management, and support customizable pool parameters. Gyroscope also issues a fully backed stablecoin, Gyro Dollars (GYD), which uses automated diversification rules, bonding-curve-based minting and redemption, and built-in oracle and circuit-breaker protections to manage risk. E-CLPs and GYD operate as connected components: E-CLPs help maintain GYD’s liquidity and stability, while GYD reserves can use E-CLP positions as yield-bearing collateral. The protocol includes mechanisms to bootstrap early GYD liquidity and uses the GYFI token for governance, allowing holders to participate in decision-making and system oversight. ^[2]  

Features

Pools

Gyroscope’s Concentrated Liquidity Pools (CLPs) are automated market makers that restrict trading to defined price ranges to improve capital efficiency, with most reserve assets expected to be deployed into these pools. The system includes several pool types: two-asset Quadratic CLPs (2-CLPs), which resemble a simplified, single-range version of Uniswap v3; three-asset Cubic CLPs (3-CLPs), which extend the same model to a multi-asset structure; and Elliptic CLPs (E-CLPs), which allow asymmetric liquidity placement along an elliptic curve for more flexible concentration. These designs focus liquidity where it is most relevant, increase efficiency relative to traditional stable swap models, and reduce the need for active management, particularly when paired with automated rate providers for yield-bearing assets. Gyroscope’s reserve can deploy its assets into CLPs to generate fees, while external liquidity providers can participate in the same pools through Balancer’s routing system. This creates a reinforcing cycle in which reserve deployment helps deepen liquidity, encourages trading activity, and supports fee generation for both the protocol and independent LPs. ^[9]

2-CLPs

Gyroscope’s 2-CLPs are two-asset automated market makers that concentrate liquidity within a predefined price range by using virtual reserves to simulate the depth that would otherwise require far more capital in a standard constant-product pool. This approach narrows trading to a focused region, flattens the pricing curve, and reduces price impact relative to pools that cover the full range from zero to infinity. Designed as a simplified, single-range variant of Uniswap v3, 2-CLPs specialize in the most active trading zones, resulting in higher capital efficiency and lower gas usage while maintaining a straightforward liquidity-provision experience. Their integration with Balancer’s architecture further optimizes routing and execution. However, 2-CLPs introduce risks common to concentrated-liquidity systems, including smart contract vulnerabilities, exposure to strategy risk when prices move outside the selected range, and adverse selection during sudden price shifts. These risks stem from the same mechanisms that enable capital efficiency and can be mitigated through careful asset selection, appropriate range setting, and monitoring pool price alignment before providing liquidity. ^[10]

3-CLPs

Gyroscope’s 3-CLPs extend concentrated liquidity to three assets, using virtual reserves and a symmetric pricing parameter to confine trading activity within coordinated price bounds across all asset pairs. Because prices in a multi-asset pool interact, the pool can quote only price combinations that satisfy a mathematical relationship, creating a defined, feasible pricing region rather than a simple linear interval. This region comprises all price vectors for which each asset has a positive balance, and its boundaries correspond to cases where the pool holds exactly one asset or reaches the upper or lower price limits. By aggregating liquidity across three assets, 3-CLPs increase capital efficiency relative to using multiple 2-CLPs, reduce gas costs for multi-asset routing, and preserve a relatively simple liquidity-provision workflow. These advantages come with risks familiar from 2-CLPs—including smart contract, strategy, and adverse selection risks—along with additional exposure from more price pairs and potential edge cases in which the pool consolidates into the least valuable asset. ^[11]

E-CLPs

Gyroscope’s E-CLPs introduce an elliptical pricing curve that allows concentrated liquidity to be shaped asymmetrically, giving pool designers fine-grained control over depth placement between two assets. Instead of distributing liquidity evenly across a bounded range, an E-CLP can tilt its profile toward specific prices—such as clustering depth around a stablecoin’s peg while tapering liquidity elsewhere—making it more adaptable than constant-product or StableSwap-style curves. This flexibility is especially useful for GYD trading pools, where the expected range is anchored by known minting and redemption prices; by truncating the curve outside that band, E-CLPs avoid reserving liquidity where trades should route through a mint/redeem mechanism instead. The design increases capital efficiency, supports customizable price impact, and integrates rate providers to improve performance for yield-bearing assets. These advantages come with familiar AMM risks—smart contract, strategy, and adverse selection—intensified by the mechanism's novel, experimental nature and the need for LPs to understand how a given parameterization affects rebalancing behavior. ^[12]

Dynamic CLPs

Dynamic CLPs layer a conditional, oracle-driven rate-update mechanism onto Gyroscope’s existing concentrated-liquidity designs, enabling pools to adjust their price ranges when they move out of bounds while continuing to function as market-making venues. Instead of passively sitting outside the range—as in static 2-CLPs, 3-CLPs, or E-CLPs—a dynamic pool can adjust its effective price scale as the market drifts, allowing volatile pairs such as ETH/BTC/USD or FX assets to remain active without manual repositioning. The update process relies on a dynamic rate provider that stores a price value and refreshes it only when the pool is out of range, aligning the pool to the nearest boundary to avoid arbitrage losses. A keeper role controls when updates occur, adding protection against manipulation by gating updates behind oracle checks, pool calibration parameters, and permissioned execution.

This design enables CLPs to maintain wide ranges, harvest volatility, and avoid frequent rebalancing trades, which can be costly in volatile markets. It works best when calibrated as broad-range, high-fee pools that minimize markout disadvantages relative to professional market makers and trigger updates infrequently. However, Dynamic CLPs introduce additional risks beyond standard AMM risks: liquidity shifts during updates can break the invariant that protects LPs in static pools, locking in losses if updates occur at unfavorable or manipulated prices. LPs also take on strategy risk from the pool’s dynamic behavior and timing risk from delayed updates when the keeper reacts slowly. ^[7]

Rehype CLPs

Rehype E-CLPs extend Gyroscope’s concentrated liquidity design by combining asymmetric liquidity placement with automatic rehypothecation into lending markets, allowing LPs to earn swap fees, lending yields, and token incentives from a single position. Instead of building stacked pool architectures, Rehype pools deposit assets like aUSDC directly at the pool-asset level, routing conversions through front-ends and smart order routing, so the underlying mechanism remains as simple as an E-CLP. This keeps the design modular and reduces contract complexity while still allowing LP shares to serve as productive collateral elsewhere.

For GYD, Rehype pools aggregate decentralized yield sources to reduce opportunity costs and lower the capital cost of supporting liquidity, offering an alternative to reliance on centralized yield venues. The structure introduces the usual E-CLP risks—smart contract, strategy, and adverse selection—alongside rehypothecation risk from the lending protocols used. Because deposits rely on platforms like Aave, LPs are exposed to additional risks, including liquidity, insolvency, oracle, and governance risks, which vary by chain. Rehype pools make this exposure explicit and user-controlled, but LPs still need to evaluate the stability and risk profile of the lending markets they choose. ^[13]

Governance

Gyroscope’s governance relies on an on-chain system running on the Ethereum mainnet, where token holders and other recognized stakeholders make protocol decisions through an open, permissionless process. Governance participants include GYFI holders, GYD liquidity providers, early community contributors, designated councilors with protocol-management expertise, and other DAOs, all of whom can vote directly or through delegation. Changes to the protocol move through proposal, forum discussion, and on-chain voting, with quorum and approval thresholds calibrated to the risk level of each action. Routine items require lighter participation, while system-wide changes demand broader agreement. Once a proposal passes, it enters a timelock period before execution, giving the community time to review and respond to any update before it takes effect. ^[14]

GYD

GYD is Gyroscope’s fully backed stablecoin, designed as part of a broader effort to build resilient financial infrastructure in DeFi. Each unit aims to be backed by one dollar in value, supported by a diversified “all-weather” reserve that initially consists mostly of other stablecoins but is structured to spread risk across censorship, regulatory, counterparty, oracle, and governance dimensions. Autonomous minting and redemption prices help keep the token aligned with its peg, allowing users to arbitrage when GYD trades above or below $1 while incorporating dynamic fees and circuit breakers to manage short-term shocks.

When the market functions normally, users can redeem discounted GYD for $1 of reserve assets. But if reserves take a severe hit, the protocol shifts to a controlled redemption curve designed to prevent runs and incentivize a return to stability. Multiple defense layers, including reserve diversification, automated pricing, and potential recapitalization through governance token auctions, support long-term resilience. The system also produces complementary infrastructure—such as trading pools and liquidity pathways—that integrate with Gyroscope’s Dynamic Stability Mechanism and help maintain deep liquidity for GYD across market conditions. ^[4]

sGYD

sGYD is the yield-bearing version of the GYD stablecoin, implemented as an ERC-4626 vault. Users can deposit GYD into sGYD and earn yield over time, with the exchange rate between GYD and sGYD automatically increasing to reflect the accumulated yield. sGYD is transferable and can be accessed permissionlessly, either directly through the ERC-4626 interface or via frontends like gyro.finance. Additionally, liquidity providers holding AMM pool shares with GYD can earn reserve yield by depositing their LP tokens into the relevant Balancer gauge. In this setup, GYD accrues as a reward token, similar to BAL, and can be claimed at any time through supported frontends or directly on-chain. ^[8]

GYFI

GYFI is Gyroscope’s governance token, used for staking to obtain voting power alongside other recognized vote sources. The token has a fixed supply of 13.7 million, with an annual 2% inflation scheduled to begin in March 2029, and its distribution follows a community-approved split of 65% to the community and 35% to FTL Labs.

The initial airdrop converts SPIN points into GYFI based on a March 2025 snapshot, with recipients choosing between fully liquid tokens or time-locked options that grant higher GYFI amounts in exchange for delayed unlocks. Nine-month and eighteen-month lockups offer 40% and 150% boosts, respectively, with larger allocations subject to an additional vesting layer. Claims occur on Base and require multisig wallets configured for that network before accessing distributions. ^[15]

Allocation

GYFI has the following allocation: ^[4]

• DAO Treasury: 32.29%
• FTL Labs: 30.53%
• DAO Initial Airdrop: 15.27%
• DAO Gyroscope Foundation: 15%
• FTL Labs SAFT Purchasers: 4.47%
• DAO Initial Services Providers: 2.43%

Partnerships

• Polygon
• Rocket Pool
• Spark
• Karpatkey
• 1inch
• KyberSwap
• Paraswap
• 0x
• Tellor
• Aura Finance
• AAVE
• Balancer