Standard Protocol — Multichain Collateralized Rebasable Stablecoin
I would like to introduce to you one of my favorite projects which will have a lot to show to Defi enthusiasts in the coming days. Standard Protocol — first Multichain Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets, that will operate within Polkadot and other ecosystems.
From this article, You will be able to find out what Standard protocol is and what it is not, but first, let’s look at the Stablecoins in general and why Standard Protocol Stablecoin will be a gamechanger for the ecosystem.
What does collateralized or rebasable or just “stablecoin” mean?
Stablecoins are a type of cryptocurrency which are designed to keep a fixed price by being pegged to a stable asset like the U.S. Dollar (USD). In layman’s terms, it gives the option to users to accept and hold crypto in form of stablecoin without worrying about price volatility. There are three types of stable coins: Fiat Collateralized, Crypto Collateralized, and Algorithmic Stablecoins.
- Fiat Collateralized Stablecoins — like Tether (USDT) backed by legal centralised reserves, which issues IOUs that are guaranteed by USD stored in bank accounts.
- Crypto Collateralized Stablecoins — backed by other cryptocurrencies and allowing users to create leverage due to volatility of collateralized assets.
- Algorithmic Stablecoins — which are not backed by any collateral, but using a mathematical algorithm to control token supply, to maintain the peg at all times.
But all of the above have some limitations and shortcomings. Traditional (Fiat Collateralised) Stablecoins are mostly centralized and are considered not transparent about their collateralization level. Algorithmic stablecoins suffer from a lack of stability as nothing is backing them apart from mechanisms for buying and selling coins directly, or by creating incentives for users to buy and sell their coins. Additionally, there comes oracles centralization and no incentivized ecosystem to distribute them.
And here comes Standard Protocol…
The New Standard for Digital Assets
Standard Protocol delivers the first Collateralized Rebasable Stablecoin (CRS) into the ecosystem. And it’s going Multichain!
Acting as a reserve bank with decentralized governance Standard Protocol issues a collateralized stablecoin MeterUSD ($USM) valued at 1$ with elastic supply with a rebasable mechanism. Rebasable stablecoin with a total supply determined by the oracle pricing and adjusted to maintain a stable 1$ value.
How Standard Protocol solves them:
- Decentralization: Unlike fiat-collateralized cryptocurrencies, Standard Protocol is fully transparent and decentralized — there is no one centralized entity that controls deposited collateral or the price/movement of tokens, which curbs against the dangers of malicious attacks and insider corruption.
- Fair and effective arbitrage participation: Liquidated collateral auctions can be inefficient and unfair, but Standard Protocol uses its own curated AMMs on decentralized exchanges, which allows for everyone to have an equal chance at buying discounted liquidated assets. This will ultimately build a stronger and more diverse community of borrowers and investors.
- Alignment with oracles: Unlike most oracles for crypto-collateralized or algorithmic stablecoins that are centralized and vulnerable to manipulation, oracles on Standard Protocol’s system are decentralized (elected by community members) and properly incentivized with block rewards to oracle providers with an 8:2 ratio between validators and the providers — standard Protocol rewards oracle providers, with 20% of the total block rewards in an era. Oracles are used for generating synthetic assets from the stablecoin
- Price stability: Because $USM (Meter Dolar) is collateralized with digital assets, Standard Protocol offers more stability than algorithmic stablecoins while still being flexible enough to rebase supply. $USM will further be stabilized when Standard will allow collateralization of synthetic assets such as sGold.
- Interoperability: Standard Protocol is based on the Polkadot ecosystem and will use Substrate to build bridges between its tokens and other cryptocurrencies, allowing for more utility than existing stablecoins.
Standard Protocol Token System
Standard Protocol has three tokens, each serving a specific purpose. Here, we look at them in detail:
Meter is the stablecoin that is synthetically generated by the protocol’s vault. By rebasing the stablecoin’s total supply with the oracle price provided by oracle clients, the stablecoin’s supply is adjusted to have a value maintained at 1 MeterUSD ($USM) = 1$.
Holders can use MeterUSD ($USM) as a medium of exchange, to buy other assets, and to farm tokens within the Standard protocol ecosystem by providing liquidity. $USM’s supply is expanded and contracted accordingly in order to maintain the peg.
$USM issuance ratio (inverse of collateralization ratio) is fully controlled by governance within an epsilon range. However, when the $USM price goes out of the epsilon range, an emergency shutdown executes and no more $USM will be issued for the rest of the era.
Starting from the next era, the system takes charge and adjusts the $USM issuance ratio to stabilize $USM price to $USD until $USM price recovers to three (3) quarters of the epsilon range.
If the $USM price is above 1$ more $USM will be minted from collateralization in the next era.
If the $USM price is below 1$, less $USM will be minted from collateralization in the next era.
*next total supply / circulating supply = oracle price / 1$*
The total supply is adjusted to follow the ratio above.
Standard automatically rebases the collateralized stablecoin, in the manner of an algorithmic reserve bank with decentralized governance of STND holders. By rebasing the price in each era, the total supply of the stablecoin Meter (USM) and the amount that can be issued are adjusted to peg MeterUSD ($USM) to the value of $USD
🚀 Meter will be scalable 🚀
Meter is collateralized with the network currency tapped into inflation of the block reward. Every holder can collateralize their network currency to the vault and the vault as a smart contract earns block rewards by staking to the network validators. As a blockchain network scales with blocks, Collaterals increase in the amount for holders to issue more stablecoins or keep the collaterals staked. For Euros or pesos, the system just requires oracles to add information to collateralize, making the token compatible with providing the same value in a trustless manner in code.
🚀 Meter will be yield-bearing 🚀
Meter can benefit holders not only with leverage trade opportunities but also provides yields from the blockchain network’s block reward. Users collateralize assets to mint MeterUSD ($USM) to the vault, which is a Smart Contract and this SC stakes these collateralized assets to validators gaining rewards from inflation (Block rewards)
Meter will become a getaway for a wide range of initiatives, from financial services to charities, and aspires to become the most used cryptocurrency in the Polkadot ecosystem. By engaging with the many different products and services that have integrated MeterUSD ($USM), users can manage and trade their crypto assets, as well as develop and expand the Standard ecosystem and the industry as a whole.
Simply by spending MeterUSD ($USM), or other stablecoins coming to the ecosystem, like MeterKRW ($KRM), MeterEUR ($EUM) you will be adding liquidity to the token, growing the global Meter economy, and raising the profile of Meter and its many advantages over conventional alternatives.
Standard Token (STND)
Standard (STND) token is the network and governance token for using Standard Protocol.
STND token holders have an option to stake STND on the Standard Protocol network. (Standard Protocol Validators or collateral providers)
By doing so, the staker receives the nomination reward and the network becomes more secured and decentralized. To use Standard Protocol’s system, the user needs to pay the fee with STND. STND can be burned or given to validators, depending on the module transaction.
STND holders can participate in the Governance of the Standard Protocol ecosystem.
It is very important to mention that the Standard ecosystem gives opportunities to its users, to benefit in both bullish and bearing market scenarios.
In Bullish Conditions — Standard Protocol issues its stablecoin MeterUSD ($USM) by collateralizing other assets. One of the key ways a user can use $USM is to purchase more collateral (typically DOT). This enables leverage trading to maximize profits with one’s existing assets.
Alternatively, MeterUSD ($USM) holders can generate synthetic assets from oracles, such as virtual stocks, commodities, etc.
In Bearish Conditions — MeterUSD ($USM) holders can still generate profits by purchasing other digital assets from liquidation. These assets can be purchased with $USM and sold on exchanges.
Unlike other liquidation processes from other DeFi protocols, Standard Protocol has its own curated AMM, where liquidated assets are utilized to provide arbitrage trade.
Liter (LTR) is a liquidity provider token representing a share from the Automatic Market Making (AMM ) module. Similar to LP tokens in Uniswap, LTR can be burned in the AMM to receive deposited assets. The Liter token can be used for yield farming.
The Team behind Standard Protocol
The team behind Standard protocol has been heavily involved with Polkadot and has successfully built projects in this ecosystem, such as PolkKR.
All team members have been validated as expert builders by creating successful projects and gaining a considerable reputation in the Polkadot ecosystem.
The team is led by Hyungsuk Kang, who has been a software engineer at Plasm, Head ambassador for East Asia of Polkadot, and Co-founder of PolkaKR. Kang’s Co-Founder is Jaewon Shin, a partner of BitBlock Capital. Billy Lee is the lead dev and has a strong background in full-stack web development.
Standard Multichain Interoperability
Standard Protocol is a multichain stablecoin that is supported by every layer within the blockchain ecosystem. It provides Layer 1 stablecoins with Parity Substrate connected as a parachain on Layer 0 and has a multichain ecosystem of stablecoin in the majority of the blockchains on Layer 1 and Layer 2. Standard focuses on building bridges and other interchain solutions to connect everything.
It has been granted with #DefiForAll Fund from Polygon and is also the first and only project from Korea to be awarded a Polkadot Web3 Foundation grant and prides itself on its global community growth approach.
There is also an Ethereum-Polygon bridge live and running. The next will be Kusama and Polkadot. You can check all of the outstanding partnerships and interconnections within the ecosystem on Standard Protocol Blog.
Standard Protocol joined Shiden Network Builders Program and secured the Grant with a unanimous vote from the Shiden core team and committee.
Standard will be launching the first MVP, MeterUSD ($USM) stablecoin going Shiden Network and it will be the first native stablecoin on Shiden Network, which unlocks financial opportunities to its community in both bullish and bearish markets.
This will be the first time Standard Protocol involves in supporting the development of a new chain in the early stage, by empowering them with one of the most essential Defi puzzles, a native stablecoin, as soon as Day One.
What’s to Come in the coming days from Standard Protocol?
There are two main things that Standard Team is currently focused on.
As we said before Standard is already bridged to Polygon. Enabling ERC20 token on Polygon, a Full-stack scaling solution that is notable with its transaction speed, capacity, and scalability on top of Ethereum, unlocks more potential for the team in expanding the vision on the stablecoin ecosystem to a much broader audience. As the main goal for Standard is to be a chain-agnostic multi-ecosystem stablecoin protocol, Standard will launch as Kusama parachain. Standard will join the third round of parachain auctions, with Unorthodox parathread already deployed.
It will be awesome to follow the competitions in the next batch of auctions.
But what excites me most is the upcoming Standard Protocol MeterUSD ($USM) Stablecoin Launch on Shiden Network. This will come with Standard Protocol Multichain DEX launching in October. This is the first DEX with native, collateralized rebasable Stablecoin, where users will be able to mint MeterUSDS ($USM), provide liquidity, farm, and receive dividends, from Day 1. Here is a little alpha leak 🚀🚀🚀
Get ready for the New Digital Asset Standard. Get Ready for MeterUSD ($USM)
🚀🚀Get Ready for Standard Protocol on Shiden Network🚀🚀
About Standard Protocol
Standard Protocol is the first Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets that will operate across multichain ecosystems, with our in-built DEX as a market maker to ensure capital-efficient liquidation process and stability of our stablecoin MeterUSD ($USM). It is also a recipient of the Shiden Network Builders Program Grant, Polygon #DefiForAll Fund and Polkadot Web3 Foundation Grant. Standard Protocol strives to innovate as the next-generation digital asset and prides itself on its global community growth approach.