One of the missing pieces for DeFi to take off on the Internet Computer is a stablecoin.
We all know that Ethereum integration will come at some point and we will be able to get some ckUSDC or ckUSDT. But having our own stablecoin, not directly connected to any bank, fully built on the IC, and 100% transparent is crucial for our ecosystem.
That’s why we introduce the Elliptic Protocol a decentralized and over-collateralized stablecoin protocol that provides a stablecoin. It allows users to exchange their assets (ICP, ckBTC) into stablecoin, providing a stable value in US dollars represented as eUSD.
Don’t miss out on the chance to be a part of the future of stablecoins. Try the Elliptic Protocol beta version today and experience the stability and capital efficiency it provides.
In addition, we are excited to announce that participants in the Elliptic Protocol ecosystem may be rewarded in the future. As we continue to grow and expand, we plan to offer incentives for those who contribute to the development and adoption of the protocol.
By testing the beta version and providing feedback, you are helping to shape the future of stablecoins and may be eligible for future rewards. So don’t wait any longer - connect to the Dapp, test the protocol, and join us on this exciting journey toward a stable and efficient financial future.
If you have questions or want to report a bug, join us on Open Chat. We welcome your feedback as we continue to develop and improve the protocol. You can also find us on Twitter.
Could you all run through the ‘how this goes bad for everyone’ scenarios? From the white paper it seems pretty straightforward that the collateral providers take it on the chin, but given the recent disasters with algo stablecoins, it would be good to have a clear discussion about how things unwind if people head for the exits.
Since there isn’t really an ‘asset of last resort,’ I would assume that a rapid decline in assets would reduce the withdraw pool that stakers could pull from, but at some point below 100% collateralization, there isn’t enough in the system to pay everyone back.
The system says the staker is liquidated but doesn’t define what the user is liquidated to. USD on coinbase? Maker on ETH? Just stoking discussion here. Looks super cool and I hope it works!
What i think would be really cool is zero-knowledge proof of sum of total assets being held by stakers (apart from what is in the stake for the staker); as well as public zero-knowledge inference about the ongoing risk in this stable coin.
For example, if someone has 1BTC and contributing 0.1 btc and someone else has 0.2 btc and contributing 0.1 btc, the total assets of all stakers = 1.2 btc, total contribution = 0.2.
From this zero knowledge, the coin could track (in a zero knowledge sense), the day-to-day fluctuations of the total assets of all stakers; so that it could know how to variably increase rewards etc
Could you all run through the ‘how this goes bad for everyone’ scenarios?
That’s a valid concern and we address this in section 6.5 ‘A cash-out scenario’. Also, note that there is a difference between algo and over-collateralized stablecoins. In summary, an algo stablecoin maintains its price stability through algorithms that adjust the supply of the stablecoin based on market demand. In contrast, an over-collateralized stablecoin maintains its price stability through a reserve of collateral worth more than the circulating supply of the stablecoin. Terra Luna was an algo stablecoin. Liquity is an over-collateralized stablecoin.
Since there isn’t really an ‘asset of last resort,’ I would assume that a rapid decline in assets would reduce the withdraw pool that stakers could pull from, but at some point below 100% collateralization, there isn’t enough in the system to pay everyone back.
In section 6.1, we discuss what happens if the collateral ratio goes below 100%. In summary, protocol fee increases, more incentive for new leveragers to come in, a transfer fee increase, more incentive for new liquidity providers.
The system says the staker is liquidated but doesn’t define what the user is liquidated to. USD on coinbase?
I am not sure of understanding the question here. But basically, the position is liquidated if the margin goes below a certain value. The data is fetched using the XRC canister, which uses HTTP outcalls to fetch CEX rates. When DeFi becomes more liquid on the IC we might be able to only use DEX data.
That’s an interesting idea. All of this data is publicly available without ZKP. Why would you want to use zero knowledge for this? Note that we built a dashboard to display all the core canister’s data: Elliptic Protocol Dashboard
As the version deployed is only for test purposes and as fetching the ICP rate consumes some cycles we don’t want to burn too many cycles for an alpha version. We fetch the ICP rate every hour. If you go on the dashboard and scroll down to ‘task queue’ you can see when is the next fetch ICP rate task.
What a specific wallet invests in eUSD is of course visible. What is not visible are latent features of that wallet . How much BTC does this wallet have in total?
Put it another way, without the knowledge of the latent space, one could conclude (falsely) that because either one can win a lottery or not win a lottery, the probability of wining a lottery is 50%
What I mean is, liquidation usually means, moving to a stable asset. Since the ICe doesn’t have a stable coin, and this is decentralized and can’t have access to USD, what do you do with the ICP that you liquidate? Do you take it and turn it into eUSD owned by the treasury? This would be a bit self referential, but maybe it works? Who’s the buyer of the ICP? Would you have enough liquidity? If you’re collateralized by ICP and it’s dropping like a stone, and you take someone’s ICP, but it’s still dropping like a Stone, you still end up with not enough collateral to pay out.
What I mean is, liquidation usually means, moving to a stable asset. Since the ICe doesn’t have a stable coin, and this is decentralized and can’t have access to USD, what do you do with the ICP that you liquidate?
The ICP which is the margin of that position is “transferred” (there is no real transfer as it is happening inside the canister’s state) from the margin pool to the collateral pool.
If you’re collateralized by ICP and it’s dropping like a stone, and you take someone’s ICP, but it’s still dropping like a Stone, you still end up with not enough collateral to pay out.
Here, of course, you could end up in an under-collateralized situation depending on the protocol’s state. There is a risk that the stablecoin may become under-collateralized, leading to a loss of confidence in the stablecoin and potential price volatility. Ultimately, the stability and value of an over-collateralized stablecoin system depend on the value of the underlying collateral assets. That’s why Bitcoin (or ckBTC) might be the best candidate as collateral. If you want to learn more about some mechanisms we are implementing read section 6.1: Emergency Response of the whitepaper.
