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Facilitators are essential components in the Hatom USD ecosystem, tasked with the minting and burning of USH tokens. These entities employ various strategies to maintain the stability and security of the USH ecosystem. Each Facilitator is assigned a 'Bucket' with a designated 'Capacity,' indicating the maximum quantity of USH tokens they can mint.
The Governance system of Hatom, which administers the operations of USH, determines and adjusts this limit for each Facilitator.
As the first facilitator of USH, the Hatom Lending Protocol plays a vital role in fostering stability within the Hatom USD ecosystem. Hatom employs an over-collateralized model, akin to its Lending Protocol, requiring users to deposit a higher value in collateral than the USH they intend to borrow. This practice minimizes the risk of default, ensuring a safe and secure lending experience.
A unique feature of Hatom is its ability to allow users to accrue yields on their deposited collateral while still retaining the capability to borrow against it. This feature enhances its appeal to users seeking additional passive income streams.
Furthermore, Hatom aids in initiating the supply of the USH stablecoin in a decentralized and permissionless way, thus allowing anyone to participate in the lending ecosystem and contribute to its stability.
Minting rates for USH are predetermined and vary according to the collateral type. The system is designed to prioritize the use of assets with lower APY for minting. For instance, if a user supplies $1000 worth of BTC and $1000 worth of USDC, a total of $1400 worth of USH can be minted. Considering that BTC has a -3.5% APY and USDC has a -2.5% APY, the protocol will initially utilize USDC due to its lower APY for the first $700 minted. Any minting beyond this amount is subject to the higher BTC APY. The overall APY is dynamically adjusted based on the proportion to each asset used after the initial $700.
Through this facilitator, users can use certain assets they have activated as collateral, with the unique aspect that interest on borrowed funds is paid to the protocol, which mints USH in return. This system ensures that the APY is not influenced by supply and demand dynamics but remains fixed per asset.
Please note: Users are able to mint USH using the Lending Protocol by leveraging various assets as collateral. However, this does not include EGLD and sEGLD. For minting USH with EGLD and sEGLD, users are required to utilize the Isolated Pool facilitator.
This facilitator offers users the opportunity to mint USH using either EGLD or sEGLD under specific conditions without a minting fee, streamlining the process and enhancing benefits.
Minting USH Using EGLD: Users can mint USH without receiving any supply APY on the provided EGLD with a 0% minting fee. During this process, the protocol automatically converts the supplied EGLD into sEGLD through Liquid Staking, which is then utilized within the Lending Protocol to generate the supply base APY.
Minting USH Using sEGLD: Similarly, sEGLD can be supplied to mint USH at a 0% Minting Fee, without earning any supply APY. Upon supplying, the protocol automatically converts the sEGLD's value to the equivalent amount in EGLD at the moment of supply, allowing users to mint USH. Once sEGLD is supplied, users cease to earn any Liquid Staking APY, with the conversion from sEGLD to EGLD being fixed at that specific point in time.
Upon withdrawal of the collateral, users are given the flexibility to instantly claim sEGLD or opt to wait 10 days to receive EGLD, providing additional liquidity options and user control over their assets
Please note: A portion of the revenue generated by EGLD and sEGLD, which users deposit to mint USH through the Isolated Pool, is reinvested into the sUSH to ensure its continuous yield generation.
The Boosted Vaults provides users with a way to deposit various assets, such as EGLD, HTM, USDC, and USDT, and take part in liquidity provision and yield farming.
When a user deposits an asset, say EGLD valued at $1000, the protocol mirrors this action by minting an equal amount of USH. This USH is then paired with the deposited EGLD to form a Liquidity Pair (LP), which is subsequently used in farming liquidity pools on supported exchanges like AshSwap, DX25, or xExchange. This mechanism effectively doubles the user's farming capability, turning a $1000 deposit into a $2000 position, thus enhancing the potential rewards.
In this process, the LP is not held in the user's wallet but managed at the protocol level. It's important to note that users assume the risk of any impermanent loss. For instance, if the EGLD value decreases, the protocol's rebalancing action involves selling USH to maintain the 50/50 balance in the LP. But on the contrary, if the price of EGLD increases, then a part of it is sold for USH, resulting in a surplus of USH for the user. This excess USH, after the protocol adjusts the LP's composition to maintain the balance, effectively becomes a benefit for the user as now the user will have more USH than the amount that was initially minted.
Upon deciding to exit the liquidity pool, users must address the full amount of USH originally minted for the LP. This typically involves using a portion of their EGLD to purchase USH, thereby completely settling the debt. For a more detailed explanation of how impermanent loss works, please check this article.
To maintain control over the USH circulation generated via the Boosted Vault and to manage its impact on the APY in the Staking Module, the system implements caps on the maximum amount of USH that can be minted. These caps are proportional to the collateral supplied in the Isolated Pool for minting USH. For example, a cap could be initially set at 10%, but it adjusts downward in response to increases in the value of assets in the Isolated Pools. The cap adjustment follows a tiered approach based on the total liquidity provided in assets like EGLD and sEGLD.
Please note: Users can boost their APY through the governance tokens needed on each exchange that they decide to farm yield; if AshSwap is used, for example, the user can boost their position with veASH tokens by depositing them directly into the Hatom Protocol.
USH's liquidity and market presence rely on Facilitators, selected and regulated by Hatom Governance, which assigns capacities and mandates adherence to a specific framework. This process, open for community input, aims to refine selection and strategy execution.
It's exciting to contemplate the innovative ways Facilitators could mint USH. This could result in the emergence of creative new strategies that enhance the value and utility of USH for its users.
For instance, Hatom's Lending Protocol, one of the initial Facilitators, employs an over-collateralized model. This ensures that USH is backed by more collateral than its actual value, providing an extra layer of security for its users. All strategies must prioritize the security and viability of the model to maintain a safe environment.
The Boosted Vaults feature an under-collateralized model, enabling users to access greater liquidity for yield farming. This allows users to generate liquidity pairs without having to sell any assets, thus enhancing profitability and capital efficiency.
Within the Hatom Protocol, USH is always priced at a fixed rate of 1 U.S. Dollar ($1), irrespective of its market value on different DEXs. Various pegging mechanisms are in place to consistently maintain this $1 valuation for USH.
When the market price of USH exceeds $1, it creates a profit opportunity for users. They are incentivized to mint new USH and sell it on the market, and then later repay when the price falls enough to ensure a profit.
To break this down:
If the USH price is trading higher than $1 (the peg) in the market, users can mint 1 USH for $1 worth of debt and sell it for more than $1.
The minter can then repay their debt for $1 while pocketing the difference. This action increases the supply of USH and puts downward pressure on its price.
Let's illustrate with an example:
The protocol maintains an internal price for USH, which is pegged at $1.
However, the market price of USH is slightly higher, say $1.05.
A user capitalizes on this difference by minting 1 USH via the Hatom Protocol for $1.
Subsequently, the user sells the newly minted USH on the market for a higher price of $1.05.
This sale increases the overall supply of USH in the market.
As more USH becomes available, the market price should, theoretically, decrease to $1 due to the dynamics of supply and demand.
The user then buys back USH from the market at the lower price of $1.
With the purchased USH, the user repays their $1 debt to the Hatom Protocol.
After completing the process, the user is left with a profit of $0.05 per USH, which represents the difference between the sale and repurchase prices.
This strategy ensures market stability by encouraging actions that bring the price of USH back to its $1 peg.
When the market price of USH falls below $1, it creates an incentive for borrowers to buy USH at this discounted price and use it to repay or liquidate their debt, profiting from the price difference.
To elaborate:
If the market price of USH drops below the peg ($1), borrowers can purchase 1 USH for less than $1, and use it to pay off a debt worth $1. This action decreases the supply of USH, which in turn pushes up its price.
Let's illustrate this with an example:
The protocol's internal price for USH is pegged at $1.
However, the market price of USH has fallen below this, let's say to $0.95.
A borrower can take advantage of this by purchasing USH from the market for $0.95.
The borrower then uses the purchased USH to repay their debt, which is valued at $1 per USH, effectively paying off their debt for less.
This action increases the demand for USH, which reduces its supply in the market and thereby drives up its price.
This mechanism ensures market stability by encouraging actions that guide the market price of USH back to its $1 peg.
When initiating the repayment or liquidation, USH is transferred back to the pool by either the borrower or the liquidator and it is burned. A percentage of the minting fees paid by the borrowers ( minters ) is being distributed to the Staking Module to ensure continuous yield for sUSH holders.
In scenarios where the collateral ratio of borrowers (minters) drops below the established minimum threshold, a process of liquidation is started to maintain the integrity and full backing of USH by collateral assets.
This liquidation process involves diminishing the debt of the borrower (minter), with liquidators being compensated through the acquisition of the collateral asset, in return for settling the outstanding debt. Following the completion of the liquidation, the borrower’s (minter’s) adjusted debt is cleared, but it’s important to mention that only 50% of the debt can be liquidated by a borrower at one time.
Being aware of market-induced price volatility is crucial, as shifts in the value of collateral can affect the health factor, potentially triggering liquidations. Should the health factor fall beneath, the collateral could be subject to liquidation. To circumvent such outcomes, one could either augment the collateral provided or settle parts of the borrow positions.
The stablecoin market is one of the biggest in the decentralized space, representing a possible trillion-dollar opportunity for all products that will find a market fit. Moreover, every ecosystem needs a safe and reliable decentralized base money asset to meet market demand.
In the MultiversX ecosystem, there is a shortage of stablecoins, with only a small market cap for those available. All of these stablecoins can be brought into the ecosystem only through the Bridge, which has multiple limitations and caps and which might not be suitable for everyone; this indicates a gap in the market and Hatom Protocol has the opportunity to innovate and better meet the diverse needs of DeFi users, thereby expanding the reach and efficiency of stablecoins' usability.
There are unmistakable indicators of the ecosystem's need for a native stablecoin, as evidenced by the demand observed through the Lending Protocol. During certain periods, the utilization rate has exceeded 90%, leading to borrowers paying exceedingly high interest rates. Such a scenario is unsustainable for the long-term health of the ecosystem.
A decentralized and over-collateralized stablecoin, backed by multiple strong assets, censorship-resistant, and also with the unique capability to offer a high and stable real yield through innovative avenues such as Liquid Staking, Lending Protocol, or Boosted Vaults.
The infrastructure of Hatom's Lending Protocol is already designed to support the essential features needed for a stablecoin and upon launch, Hatom is set to introduce three facilitators for its stablecoin: the Hatom Lending Protocol as the primary facilitator, Isolated Pools with zero minting fees for EGLD and dynamic minting fees for sEGLD, and the Boosted Vaults facilitator, which is aimed at significantly enhancing the liquidity of the stablecoin within the ecosystem.
Transparency: Decentralized, over-collateralized stablecoins offer a transparent ecosystem where all financial operations and collateral statuses are openly recorded on the blockchain. This system allows users and auditors unlimited access to validate the health and fairness of the stablecoin, promoting an environment of trust and security.
Stability: By providing collateral that exceeds the value of the stablecoin in circulation, Hatom ensures that the coin's value remains stable against its peg, despite market fluctuations. This over-collateralization acts as a safeguard, providing users with confidence in the stablecoin's purchasing power.
Censorship Resistance: Leveraging decentralized technology, these stablecoins operate beyond the reach of centralized authorities, offering a financial instrument that is resistant to censorship. This ensures that transactions and participations are uninhibited by geopolitical and institutional constraints, affording users global access and financial sovereignty.
Yield Generation: sUSH introduces a competitive and stable yield opportunity through its interest-bearing model. This feature enables holders to generate earnings on their stablecoin holdings, enhancing the value proposition of sUSH within the DeFi landscape by providing a mechanism for passive income generation alongside asset stability.
Currently, stablecoins can be broadly categorized into three distinct groups: those backed by fiat currencies, others backed by cryptocurrencies, and those that rely on algorithms to uphold price stability. The primary distinctions among these categories stem from the underlying backup that determines their value, the collateral necessary for their issuance, their methods of issuance, and the strategies employed to maintain their price stability.
USH is purposefully designed without a centralized locus of control. The governance of USH is vested in the hands of the Hatom Protocol Community and Hatom Governance. This arrangement ensures a higher degree of transparency for USH compared to other market counterparts. Any updates or modifications to the protocol, including changes in interest rates or risk parameters, are made public. These changes require prior consensus from Hatom Governance before implementation, ensuring a democratic and transparent process.
This multi-backed approach, alongside market efficiencies, ensures USH's stability and reliability. Users mint USH by providing collateral at predetermined ratios, supporting its value with a diverse basket of solid assets. The mechanism of liquidating or repaying borrowed positions, which leads to the 'burning' or removal of USH from circulation, further maintains the stablecoin's parity with the U.S. Dollar, ensuring its consistent performance and trustworthiness in the market.
Permissionless Acquire USH: Trade USH or sUSH on multiple exchanges without the need to provide collateral.
The increase in price doesn’t rely on a liquidity mining program, but it derives from well-thought-out and sustainable revenue sources such as:
Consider this scenario for a clearer understanding:
Suppose EGLD is priced at $70, and in an isolated pool, $50 million of it is used as collateral. Now, let's say 40% of this collateral is utilized to mint sUSH, which equates to $20 million. If sUSH has a staking APY of 14% and the price of EGLD suddenly rises to $700, the value of the rewards from the staked collateral would also increase by a factor of ten.
As a result of this price jump, it would be possible to offer an APY of 140% on sUSH. This high APY incentivizes users to mint additional sUSH and to contribute more collateral to the system. This process ensures that the minting of USH keeps pace proportionally with any increases in the value of EGLD, maintaining a balance in the APY with each price change.
Upon the strategic expansion to additional blockchain ecosystems, the Hatom Protocol v2 will incorporate a diverse array of Liquid Staking Tokens (LSTs) including, but not limited to, stETH, cbETH, and rETH, alongside liquid derivatives of SOL, AVAX, and other native tokens from the respective ecosystems.
Decentralized Stablecoins | Centralized Stablecoins | Algorithmic Stablecoins |
---|---|---|
USH is the first native, over-collateralized, and decentralized stablecoin on the blockchain, designed to maintain a stable value pegged 1:1 to the U.S. Dollar. It is minted by supplying blue-chip assets like WETH, EGLD, WBTC, USDC, or any other asset supplied into as collateral and other innovative and well-designed mechanisms.
Given the recent fluctuations in the market, there is an increasing demand for stablecoins that are decentralized and over-collateralized to maintain the values of the crypto sphere. As a stablecoin that our platform's controls, USH is well-positioned to meet this demand. With community support, USH has the potential to evolve into an integral component of the DeFi ecosystem, providing stability amidst market fluctuations and removing the current high borrow APY present on the markets.
In addition to USH, Hatom also introduces an interest-bearing version of USH, called sUSH, which represents the underlying USH utility plus a real yield which is accumulated constantly through multiple avenues used to mint USH. Users can mint sUSH through the.
It is worth noting that interest payments made by USH minters through the Lending Protocol are not directed into a typical, as is the case with borrowing other assets. Instead, these payments are funneled directly into the to increase the price of sUSH, the interest-bearing stablecoin.
Direct Mint USH: Mint USH directly through multiple facilitators such as ,, or .
Direct Redeem USH: Exchange USH directly in for a value fixed at $1.
Stake USH to mint sUSH: Stake USH in the and receive the interest-bearing version of USH, earning interest passively.
Please note: While USH will initially launch as the first native stablecoin on , it is slated to evolve into an omnichain stablecoin, as outlined in the updated and the protocol’s development towards an omnichain model.
The allows users who are seeking to earn passive income on their USH holding to stake it and receive the interest-bearing token version of it, sUSH. It works in a similar fashion with sEGLD, where the rewards from different sources are reinvested back in the to increase the price of sUSH relative to USH.
Minting Fees From the Lending Protocol: Fees generated through the are injected back into the .
Isolated Pools Revenue: A significant portion of revenue comes from the EGLD collateral in the . This EGLD is deposited in the and then supplied to the , where it earns a base APY on top of staking rewards.
Boosted Vaults Streaming Fee: Revenue is also sourced from the streaming fee applied in the , adding another layer of income to support the sUSH yield.
Through this diverse and robust revenue generation model, the not only offers an attractive yield on sUSH but also ensures that the yield is sustained and supported by actual economic activities within the protocol.
These promote an unprecedented level of transparency and resistance to censorship, upholding the principles of privacy and the core values of decentralization.
Users must place their trust in the stablecoin issuer. Such stablecoins are subject to potential blacklisting and may have less transparent backing structures.
These rely heavily on algorithmic formulas to regulate supply and demand, seeking to maintain stability in fluctuating markets.
Hatom is a decentralized protocol managed by the Hatom Foundation and HTM token holders. Any changes or upgrades to the Hatom Protocol must be proposed and voted on by the community through Hatom Governance. Every HTM token holder can have a say in the protocol's future, making it truly decentralized.
Hatom Governance has a crucial role in determining USH and sUSH Facilitators and their parameters. It is also responsible for proposing changes to the current implementation. Frameworks and processes for Facilitators and their parameters are open to community discussion.
Hatom Governance is responsible for supervising the implementation of the different strategies of the Facilitators for both USH and sUSH. This is achieved by approving and removing Facilitators in a meticulous manner.
Before being granted permission to mint USH tokens, each Facilitator is subjected to an audit and review process by the Hatom Governance. Additionally, each facilitator is required to adhere to specific governance rules that define the maximum amount of USH tokens they can mint. Hatom Governance has the ability to attract a diverse range of facilitators, including those who are not affiliated with the Hatom Protocol.
Hatom Governance has the power to define the interest rates and discount rates to encourage the minting or burning of USH tokens. The interest rates can be periodically modified based on the supply and demand models of USH, enabling the protocol's health to be managed with greater flexibility. Both the interest rate and discount rate can be configured by Hatom Governance, providing HTM token holders with complete authority over USH monetary policy.
Please note: Currently, USH is not fully governed by the DAO, and the Foundation still oversees the protocol's decision-making processes. The transition to a fully decentralized risk DAO will occur once the Foundation deems the protocol ready and there is an evident understanding of the Governance process within the community. At that point, the entire protocol's governance will be handed over to the community.
Although the process of interacting with USH in the Hatom Lending Protocol shares similarities with other assets, there are notable distinctions in how USH is implemented and how users interact with it within the USH pool. These differences are specifically designed to ensure the price stability of USH.
Unlike the other assets within the Lending Protocol, USH operates differently. It is minted and burned by the smart contract each time a user borrows and repays it. While USH can be provided in the Lending Protocol and utilized as collateral, it's essential to understand that the supply APY for USH remains fixed at 0%. However, if extra rewards are introduced to the USH Money Market, those who utilize it as collateral could earn these additional rewards.
The USH minting interest rates and discount rates are determined through Governance. Periodically, Hatom Governance has the authority to adjust the interest rates in order to ensure stability following the supply and demand dynamics.
In the Hatom Lending Protocol, users must supply assets into their respective money markets for others to borrow them. This ensures that if a user wants to borrow USDC using collateral, liquidity in USDC must have been provided by another user within the protocol.
However, this mechanism does not extend to USH. Specifically, users wishing to borrow USH can do so without a previous user supply of USH in the market. The protocol uniquely mints USH on-demand for borrowers, and upon repayment, the USH is burned, eliminating the need for supply-side liquidity for this asset.
Users can use certain assets offered on the Lending Protocol as collateral for minting USH. The quantity of USH they can mint is determined by the value of their collateral and its corresponding collateral factor.
Through the Lending Protocol, all assets allowed to mint USH will be assigned a fixed discount rate. However, these rates will not be uniform across all assets; some will have a low discount rate, while others will have a higher one. Despite the varying amounts of USH minted through this facilitator, these rates will remain constant. Consequently, users can precisely calculate their annual loan payments, as the utilization rate will not affect these calculations.
The Isolated Pools will offer a convenient way for the users to mint USH without any minting fee. This approach simplifies the minting process, making it more accessible and cost-effective for users interested in leveraging their EGLD or sEGLD assets.
It will feature some novel implementations, where both EGLD and sEGLD provided by the users are used in the Liquid Staking and Lending Protocol to generate yield which is then injected into the Staking Module ensuring constant growth of sUSH relative to USH.
The Boosted Vaults will come with no minting fee for USH, but users will be charged a small fee for the rewards earned through this type of under-collateralized yield farming strategy.