Gemini Earn was a centralized cryptocurrency lending program offered by the Gemini exchange, designed to allow users to earn yield on their digital asset holdings by lending them to institutional borrowers. Its purpose was to provide a passive income stream for crypto investors, leveraging demand for short-term capital from entities engaged in market making, arbitrage, or other yield-generating strategies. This service aimed to bridge institutional demand with retail crypto holdings.
Mechanism
Users deposited eligible cryptocurrencies into their Gemini Earn accounts, which were then loaned to Genesis Global Capital, a third-party lending partner. Genesis subsequently deployed these assets into various investment activities, including institutional options trading and market liquidity provision, and paid interest back to Gemini. Gemini then distributed a portion of this interest to its Earn users, deducting a fee for its service. The operational architecture relied on contractual agreements between Gemini and Genesis.
Methodology
The methodology behind Gemini Earn positioned it as a yield-generating product for crypto investing, emphasizing simplicity for retail participants to access institutional lending markets. While aiming for competitive returns, the platform’s structure involved counterparty risk with Genesis, which became evident during market downturns. This system demonstrated a model for connecting retail capital with institutional financial operations, though its subsequent financial difficulties highlighted the systemic risks inherent in such centralized lending protocols within the broader crypto technology landscape.
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