Understand the advantages of the AgeUSD stablecoin protocol in one article

AgeUSD is a brand-new algorithmic stablecoin protocol supported by cryptocurrency, which is jointly developed by Ergo community developers, EMURGO and IOG on the Ergo public chain. This repository contains AgeUSD's specification/smart contract/off-chain code (headless dApp), and includes everything community developers need to deploy their own AgeUSD instance on the Ergo public chain.

AgeUSD does not rely on CDPs (Collateralized Debt Positions) like the current design pattern of popular cryptocurrency-backed stablecoins. This was a conscious design decision due to the vulnerability of CDP-based protocols in the face of violent volatility and/or blockchain congestion. These weaknesses were manifested during Black Thursday, the March 12, 2020 crash event, when MakerDAO’s CDP was triggered to liquidate due to volatility, and then block other bids due to blockchain congestion, selling for $0 Priced to sell.

Due to its design, the AgeUSD protocol, which happened on Black Thursday, could not have happened. Without CDPs, we would have no liquidation events, and would not require users to execute transactions to ensure that liquidations actually function properly (rather than allowing bad actors to steal funds from the protocol). These are inherent vulnerabilities when using CDPs to mint stablecoins and thus pose additional risks to end users.

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The AgeUSD protocol is designed to reduce the surface area where such problems can arise. The goal is to try to automate as much as possible within the mathematics of the protocol itself, rather than relying on dynamic transaction publishing, which can be disrupted by blockchain congestion. This is not to say that the AgeUSD protocol can solve all the problems of stablecoins, but it is an attempt to provide a higher assurance alternative to the current trend in the cryptocurrency space.

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Directory

1. How does the AgeUSD protocol work?

2. Handling fee

3. Traverse this repository

4. Related works

How does the AgeUSD protocol work?

Essentially, the AgeUSD protocol is easy to understand. There are two kinds of parties that interact with the protocol:

1. Reserve provider

2. AgeUSD users

Reserve providers submit Erg (Ergo native token) to the dApp's reserve and mint "ReserveCoin" in this way. Each Reserve Token is part of the underlying Erg Reserve held in the dApp.

AgeUSD users also submit Erg to the dApp's reserve, but in this case they are minting AgeUSD. The protocol only allows this if there is sufficient reserve within the dApp (reserve higher than the minimum reserve rate). At any given moment, an AgeUSD user can exchange their AgeUSD for a certain amount of Erg, which comes from the reserve, at the current exchange rate provided by the Erg-USD oracle pool.

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Reserve providers can only convert their reserve tokens to Erg if the price of Erg increases (or a significant protocol fee is charged), protecting the value of all existing minted AgeUSD plus additional profits. By exchanging their own Reserve Tokens, they earn more of the underlying Reserve Cryptocurrency (increased amount from users who minted AgeUSD) than when Reserve Tokens were minted, thus making a profit.

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Thus, Reserve Providers allow AgeUSD users to enjoy price stability. Ultimately, the reserve provider absorbs the potential upside (if the price of the reserve increases due to ERG rising relative to the USD), but also the potential downside (if the price of the underlying cryptocurrency in the reserve falls).

This enables individuals to choose to "go long" Erg (by minting Reserve Tokens), or opt for stability (by minting AgeUSD).

For more detailed instructions, check out:

1. Algorithmic Stablecoins Backed by Pegged and Cryptocurrencies - Bruno Woltzenlogel Paleo - Ergo Summit 2021

Data: Top 100 Polygon holders account for 91.06% of all MATIC tokens: October 19 news, recent data shows that the top 100 Polygon holders account for 91.06% of all MATIC tokens, most of which are network contract. (Be in Crypto)[2021/10/19 20:39:52]

2. "AgeUSD Smart Contract Protocol Overview - Amitabh Saxena - 2021 Ergo Summit"

3. "AgeUSD Short Summary Document of Ins and Outs".

Cost

The default value of the AgeUSD protocol fee parameter is:

1. 2% protocol fee (Protocol Fee)

2. 0.25% Frontend Implementor Fee

Protocol fees are charged for all minting/exchanging operations on AgeUSD and ReserveCoin in the protocol. Erg generated from this fee is returned to the protocol reserve, thus directly benefiting reserve token holders. In other words, if you hold reserve tokens, you will not only be rewarded if the price of Erg rises, but you will also be rewarded if a lot of people use the AgeUSD protocol. This provides a further incentive for reserve providers to ensure that there is always sufficient liquidity, and thus, AgeUSD users can always mint AgeUSD.

The front-end implementer fee is a fee paid to front-end implementers who build a graphical user interface (GUI) on top of the AgeUSD headless dApp. This fee payment is automatically performed as part of each minting/exchanging operation, and the front-end implementer only needs to provide its address as an input to this operation method, thereby incentivizing the construction of a decentralized and competitive AgeUSD front-end future ecosystem.

These fees are adjustable by deployers on the AgeUSD protocol chain and are therefore only recommended defaults.

traverse this repository

This repository contains the specifications, smart contracts and off-chain code (headless dApp) of the AgeUSD protocol.

AgeUSD specification

The AgeUSD specification is a high-level specification of the AgeUSD protocol in the extended UTXO model on the Ergo platform. These specifications, starting with v0.1, demonstrate the addition of various features during the design process of the AgeUSD protocol.

AgeUSD Smart Contract

The AgeUSD smart contract is written in the ErgoScript language, also starting from v0.1, and it is constantly increasing as new functions are added or bugs are fixed.

AgeUSD headless dApp

The AgeUSD headless dApp is off-chain code that provides developers with a pure, portable interface for reading the current state of deployed instances on the AgeUSD chain, performing operations in the The implementer's life is easier.

Readable AgeUSD Status:

Basic Reserve

Liabilities

Equity of mortgage assets

Number of Stablecoins in Circulation

Number of Circulating Reserve Tokens

Stable coin nominal price

Reserve Token Notional Price

Action:

Exchange Stablecoins

Exchange Reserve Tokens

Helper method:

Cost of Minting X Stablecoin

Cost of Minting Y Reserve Tokens

Amount received by exchanging X stablecoin

Amount received in exchange for Y Reserve Tokens

AgeUSD Client

The AgeUSD client uses the AgeUSD headless dApp and implements a command line interface to interact with on-chain protocol deployments. The CLI uses an Ergo node to do a UTXO setup scan to find the desired box and publish the transaction.

The client is primarily intended for technical users to interact with AgeUSD's deployment, and is an example for front-end developers to understand how to implement a front-end when creating a GUI. (Note that the AgeUSD headless dApp provides an interface to find all input UTXOs without scanning with UTXO settings, making the developer experience very smooth)

Related works

The AgeUSD protocol was inspired by the staticoin protocol (Staticoin Protocol), but has been redesigned from the ground up to accommodate the extended UTXO model, while providing several improvements to greatly increase the stability of the stablecoin. In this way, we gain the benefits of avoiding CDPs while overcoming some of the flaws encountered by the Staticoin protocol (the lack of a mechanism to overcompensate reserves to manage volatility being the biggest).

Annotation:

AgeUSD is just an algorithmic stablecoin protocol jointly developed by Ergo community developers, EMURGO and IOG on the Ergo public chain. The launch of SigmaUSD by Ergo community developers is based on the AgeUSD algorithmic stablecoin protocol. According to foreign blockchain media reports, the algorithmic stablecoin that Cardano will deploy will also be based on the AgeUSD protocol.

Original link:

https://github.com/Emurgo/age-usd

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