Quick Intro To Stabilizer 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 the stabilizer should be as same as the owner of the Debaseonomics policy contract.
  3. Game theory dictates governance will ensure an additional constraint. It should work to stabilize the price of Debaseonomics and benefit DEBASE holders either by providing buy pressure, removing tokens from the supply, or any other means including but not limited to yield farming, debt mechanisms, arbitrage, collateralization by a protocol/synthetic or digital asset, etc.

Roughly speaking, there are two types of s-pools; passive pools and active pools.

Passive stability pools does not have an active agent of stabilization, and rely on the fact that people stake DEBASE into it to stabilize supply (and therefore price). Example of a passive pool is one where DEBASE is deposited and if there are no negative rebases in n cycles (n being some integer) then this pool gets rewards in DEBASE. This pool then distributes these rewards to stakers. This pool is a low-risk pool since it entails no loss in the quantity of DEBASE staked to it.

On the other hand, an example of an active s-pool is a yield vault, that takes DEBASE/other assets as capital, uses a yield farming strategy to generate more capital and uses part of the profits to peg DEBASE to target. The rest of the profits can be paid out in a predetermined ratio to various stakeholders (governance, pool-creator, capital providers) with the capital finally returned to the capital providers.

In reality, stabilizer pools are not categorical and will exist on a spectrum between these two extreme types of pools (active and passive). One can imagine an s-pool involving derivatives, where users use a p2p options protocol to hedge against/for the peg of DEBASE, as they interact with the market to move the price ever so slightly to their advantage.

Whatever the terms of a pool are, users will know them before depositing their assets into them, and of course, the pool-contract will itself be public by the time governance approves it.

Now there is a question of who will design these s-pools? Some s-pools will be created internally, at least in the beginning; but anyone can create them. Hence, the strength of Debase is dependent on having as many strategists as possible who create various types of s-pools.

Eventually we would on-board to governance those who actually can design active stabilizers or brainstorm design of passive ones. Being part of governance, one can profit from successful stabilizers once profit sharing is voted in; one can also have a say in dictating the monetary policy of Debase (target price, rebase lag, choice of price oracles, etc.).

By: anon18382



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