An algorithmic stablecoin pegged to the value of the US Dollar.
This system comprises two contracts:
- StableCoin (STC)
- DepositorCoin (DPC)
The StableCoin minters pay only the amount of STC they mint. Over-collateralization is maintained by liquidity providers who deposit without intending to mint StableCoin.
- DepositorCoin (DPC): Liquidity providers receive DPC tokens equivalent to the USD value of their provided liquidity.
- Leverage Trading Mechanism:
- Example:
- ETH Price: $1,000/ETH
- Minting Scenario:
- Person A mints 500 STC by depositing $500 worth of ETH (0.5 ETH).
- Person B provides liquidity by depositing $1,000 worth of ETH (1 ETH) and receives 1,000 DPC.
- Total ETH in Pool: 1.5 ETH ($1,500).
- Example:
-
Scenario A: ETH Price Decreases ($500/ETH)
- Total ETH in Pool = 1.5 ETH = $750
- Total DPC Supply = 1,000 DPC
- Total DPC Value = $750 - $500 (STC liabilities) = $250
- DPC Price: $0.25/DPC
-
Scenario B: ETH Price Increases ($1,500/ETH)
- Total ETH in Pool = 1.5 ETH = $2,250
- Total DPC Supply = 1,000 DPC
- Total DPC Value = $2,250 - $500 (STC liabilities) = $1,750
- DPC Price: $1.75/DPC
If the collateral falls below the value of minted StableCoins:
- Contract Freeze: The StableCoin contract is frozen.
- DPC Devaluation: DepositorCoins are deemed worthless.
- Re-Collateralization:
- New liquidity providers must deposit a sufficient amount to over-collateralize and restore the pool's health.
- Incentives: Exclusive liquidity provision rights for a specified duration.
- Algorithmic control ensures a stable peg to the US Dollar.
- DepositorCoin holders benefit from a leverage-based profit mechanism.
- Strong incentives for re-collateralization to maintain system stability.
This system is experimental and carries risks, especially during periods of high volatility. Please exercise caution and conduct thorough research before participating.