The Stabilize Protocol is an upcoming protocol that rewards depositors of stablecoins with the STBZ reward token. The reward varies how close the stablecoin is to its peg. The higher the stablecoin is above its peg, the less reward it gets, the lower, the more reward it gets, thus a system is created that pushes stablecoins closer to their pegs.
Unlike other yield farming platforms, Stabilize will benefit the entire DeFi ecosystem as a whole by bringing stability to stablecoins.
What is the problem?
Stablecoins are cryptocurrencies designed to be pegged to or float near fiat currencies. This gives traders and savers comfort knowing the value of these coins in the real world will be the same tomorrow as it is today. This is the goal of stablecoins but sometimes is not the reality. In reality, stablecoins sometimes go off their peg for an extended period of time due to fluctuations in demand and supply issues. This can cause a headache for those who depend on the stability of their stablecoins for everyday usage.
How is Stabilize the solution?
The Stabilize protocol rewards depositors of stablecoins with STBZ token. The yield of each stablecoin pool will change according to the stablecoin price of that pool. Depositors are encouraged to switch pools to earn higher yield and also help balance the prices of all stablecoins in the protocol.
Initially there will be 4 stablecoin pools on Stabilize:
Unique to Stabilize is the fact that these pools are not liquidity pools but rather stablecoin pools thus depositors are protected from impermanent loss. Initially, there will be one liquidity pool on Stabilize, which is a STBZ/ETH 50:50 Uniswap pool.
The Stabilize protocol is open to depositors now but rewards will not start distributing until September 29th, 2020 at 00:00 UTC. During the first year, it is expected that 1 million STBZ tokens will be minted to protocol users. There are no VC investors and no presales of STBZ. After the first year, there will be constant inflation rate of new tokens minted that will be offset by a new per transaction burn rate. The initial inflation rate is 1%, and the burn rate is to be determined. Only during the first year, the development team will receive 1% of tokens minted, after which it will decrease to 0%. The first year minting rate is below:
- Week 1: 76,000 STBZ
- Week 2: 57,000 STBZ
- Week 3: 38,000 STBZ
- Week 4: 19,000 STBZ
- Week 5–52: 16,875 STBZ
The pools have unequal allocation of tokens with the STBZ/ETH pool receiving 50% of all new tokens initially and the other pools splitting the rest based on their price compared to $1.
Long term usage of STBZ
Although STBZ has no inherit real world value, the tokens are planned to be used for governance decisions after the protocol launches successfully. The development team will navigate the early path for the protocol but once bootstrapped, the community will control the protocol. Various methods of control could be changing important aspects of the protocol such as the burn rate, the emission rate and what new token pools are accepted. STBZ holders can develop a system that rewards token holders for providing liquidity to new stablecoin projects to further promote the usage of stablecoins.
The development team takes security of your funds and your rewards seriously. Although most of the code is based on audited and battle-tested code, the team plans to dedicate a portion of its funds for smart contract reviews and audits.
Many protocols give the development team full control over minting of their reward token. This is a security risk because at any time, the developers can mint infinite tokens and destroy all liquidity pools for that token. In the Stabilize protocol, the smart contract controls the minting rate and the only thing the development team can do is decrease it. In addition, all governance functions are controlled by a 24 hour timelock. This gives depositors enough time to make a decision to stay in the protocol or not.
The pools reward rates are dictated by their USD prices. This can be updated every 6 hours. Unlike other protocols that use the development team as the source for real world data, Stabilize uses on-chain decentralized price oracles powered by Chainlink and Aave to access this data. These price oracles are resistant to flash crashes and manipulation.
Functions that keep the protocol running (pool rebalancing and new week minting) can be called by anyone, not just the development team.
Price Oracle Address: 0xB54e7175db55D0Effcc974f146b3714910907A58
Token Address: 0xB987D48Ed8f2C468D52D6405624EADBa5e76d723
Operator Address: 0xEe9156C93ebB836513968F92B4A67721f3cEa08a
As mentioned previously, Stabilize is at the moment an unaudited protocol, and its token STBZ has a zero real world value. Do not deposit into the contracts more than what you are willing to lose and do your own research by evaluating the smart contracts before use.
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