In the DeFi space, options are only just entering the market. Opyn was the first of its kind to develop a decentralized options protocol. Hegic followed after, attracting liquidity very quickly. Both are innovative in their own ways, and there is continual development in the options space.

As DeFi users are more comfortable with the new tools and mechanisms, the next step is to think of risk management in trading as well as capital efficiency. Both can be achieved with options. Hence, the mechanisms behind options protocols in terms of pricing premiums and other risk management is very attractive.

In…


What are Algorithmic Stablecoins (Algo Stablecoins)

Stablecoins are tokens pegged to the price of a certain asset; for example, the price of 1 US dollar. There are many ways to achieve the desired peg. Algo stablecoin is a sub-category of stablecoins that maintain the $1 peg algorithmically.

Specifically, Algo stablecoins are a category of stablecoins that use algorithms (computational procedures often based on mathematical models) to maintain the peg through various ways, including:

  • Changing the circulating supply to get a stable value of the asset or rebalancing the collaterals.
  • Using a reserve to back the value of the stablecoin (e.g. $USDC, $USDT, Paxos).
  • Dual coin mechanism…


Credit: Roger Deakins

This is Part 1 in a series of three articles explaining Stabilizer Pool 4 (SP4). The goal of SP4 is to build an algo-stable asset with collaterals and supporting expansionary policy with real asset-backed inflation. In this article, we will specifically discuss:

  • Problems faced by algo-stables today
  • Capital efficiency for stable coins
  • Operational Mechanism of SP4
  • Risk management model of SP4
  • Why this modular monetary policy is chosen
  • DEGOV: Network Security and Value Accrual
  • FAQ (live and will be updated based on feedback)

Overarching goal of Debaseconomics: creating a modular general strategy where we can add different tools during contraction or expansion of the monetary policy

Problems with Algorithmic Stablecoins

In general, algo-stables have two main functions: to expand their supply when they are overpriced and to contract when they are underpriced. …


The basic design of SP2 revolves around the notion of allowing people to buy coupons (d-bills) when Debase goes into a contraction (Epoch TWAP below the stability range; <0.95 under current settings, Epoch time: 24 hours) so they can earn a premium in Debase on those coupons bought when Debase into an expansion (Epoch TWAP > 1.05). By buying d-bills Debase holders exchange their DEBASE for coupons at a ratio of 1:1; these Debases are sent to the reward contract. …


Imagine a simple staking pool that gives out rewards in tokens T to liquidity providers (LPs) of pair L. Its goal is to distribute T while maximizing consistent liquidity in pair L. Here is the pedestrian routine: Fork the infamous Synthetix code for staking pools, set a static reward rate (or for a more sophisticated pool, a predetermined static rate function), send T to pool contract, and watch LPs claim T proportional to their share and time in the pool. But, what if the protocol running the staking pool had governance? …


We are happy to announce that randomness in Debase is now being provided by the Chainlink Verifiable Randomness Function (VRF) on mainnet.

We are happy to announce that randomness in Debaseonomics is now provided by Chainlink VRF on mainnet, a move directly in line with our commitment to decentralization, security, reliability, and fairness of the protocol. Chainlink VRF uses a verifiable random number generating function to provide a secure and provably fair source of randomness based on a seed provided by users.

Our Stabilizer-pool 1 (SP1), which provides rewards to liquidity providers (LPs) at random (but not arbitrary) intervals, utilizes…


DEBASEONOMICS X 88mph

In this article, we explain our stabilizer pool design and introduce Debaseonomic’s first governance partner. Stabilizer pools (s-pools) are a central idea in Debaseonomics which allows for external stabilization of DEBASE and solves the problems faced by current algorithmic stable coins. For a brief primer on s-pools and the design considerations behind them, please refer to our previous articles.

There are two conditions to consider when designing s-pools:

  1. Expansion (Positive rebase cycles)
  2. Contraction (Negative rebase cycles)

Keeping these three factors in mind we propose the following three s-pools. …


Photo by Patrick Fore on Unsplash

Stabilizer pools (s-pools) are an innovation in Debaseonomics that aims to solve the issues plaguing elastic supply tokens. One of the major issues is that supply change in of itself is often not sufficient to guarantee price stability of token. Therefore, the main aim of these pools is to stabilize the price of the elastic monetary token DEBASE to target price. A stabilizer pool is open-ended and has the following two constraints only:

  1. It should have a function that informs governance if it is requesting rewards for stabilization of DEBASE or not (and if so, how much)
  2. The owner of…


Defining Decentralization

Decentralized finance (DeFi) refers to the mapping of (usually) traditional financial operations to blockchain functionality. In general, decentralization is a hard concept to pin down in abstract definitions; it can have no ideal mathematical formulation that is agnostic to underlying sociocultural realities. For any mathematical proposal for distribution of power, one can realistically think of a society where that particular distribution would lead to the privileging of one set of interests over others.

In other words, decentralization should be contextualized in a specific socio-economic situation at a specific time.

For instance, assume that voting is mandatory in an economy to…


Photo by Austin Distel on Unsplash

Although Debase is designed to overcome some of Ampleforth’s core limitations, it is indebted to Ampleforth for the idea of an elastic supply change mechanism. This mechanism allows Debase’s supply to be changed according to the current market demands.

That is, when demand is high more coins can be minted and when demand is low, total coin supply can be contracted. To understand rebases, it’s imperative first to understand why an elastic supply change coin needs to exist.

Smol History Lesson Cryptocurrencies have volatile price histories. To overcome this instability, many Fiat like stable coins launched (Tether, USDC) where the…

Debase_explained

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