The Stabilize Protocol team continues to innovate and find new ways to utilize stablecoins and help them stay on their pegs. In addition, we seek to find new opportunities that will benefit the entire cryptocurrency community.
We plan to integrate privacy protocol Tornado.cash as we believe it can help keep stablecoins fungible and give depositors the ability to keep their stablecoin balances private.
Why is this important?
This addition will make Stabilize the premier spot to park stablecoins for those who want to maintain the privacy on their deposits. It is very similar to a bank, where you deposit your money into a private account and when you are ready to withdraw, you provide proof of deposit to receive your money back.
In this case, you deposit your stablecoins into a smart contract and receive a note. You will eventually use that note to withdraw the same quantity to an address of your choosing. Observers would be unable to connect your deposit address to your withdraw address.
Why not just use Tornado directly?
Tornado currently relies on the usage of relayers to complete withdrawal requests for depositors. Relayers are ran by volunteers who keep servers up to accept requests from those who want to withdraw. The uptime of these relayers vary and the deployment of a new relayer can be tricky for a novice user.
If all the relayers are unavailable, the depositor must manually withdraw their coins from the contract and potentially lose his/her anonymity.
Stabilize will introduce something called marketplaces, a place where users are incentivized to complete others’ withdrawal requests. This system will not rely on relayers but rather on users who want to make a quick profit by executing a transaction on behalf of another and earning a withdrawal fee.
Users simply post their withdrawal requests specifying the recipient address of the deposited funds and the fee to the marketplace without spending any gas and other users can execute those withdrawal requests to earn the fee.
How does this help stabilize stablecoins?
At the time of withdraw, a part of the withdraw fee will go to the Stabilize Treasury.
The minimum fee for withdrawing will be a percentage of the stablecoin deposit amount. If the stablecoin that is being withdrawn is below its peg, the fee will higher to withdraw than if the stablecoin is above its peg. This is done to encourage selling of stablecoins that are too scarce to bring them back down to their peg.
As mentioned in the previous article, the treasury provides directly value to holders of STBZ as users can burn their tokens to earn a part of the treasury.
When will this integration finish?
The original intent was to wait until the Tornado team completed version 3 of their code; however, Tornado version 2 is very capable and has features that can benefit Stabilize right now.
We are actively researching and testing this protocol and will update the community via Twitter and Telegram periodically as to when it is ready for release. The Stabilize team continues its aim in providing value to the overall DeFi community.
Visit the website to get started using the Stabilize protocol, follow us on Twitter and join the community on Telegram