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In the morning, I saw a Weibo of He Taiji, the good guy is so violent.
I quickly checked what the BAC is. According to the information on the chain: the algorithmic stable currency project Basis Cash was launched by an anonymous team and has also been open sourced on Github (no audit information is seen).
Basis is an early DeFi algorithm stablecoin project that was closed due to the risks associated with the SEC. Basis Cash was established by a group of anonymous developers who were not afraid of the SEC. There was no venture capital investment, no token sales, and no pre-sale tokens. currency.
There are three types of assets in the Basis Cash system:
1) BAC (Basis Cash) is a stable currency that is pegged to the U.S. dollar price;
2) BAB (Basis Bonds) is an IOU issued by the system to buy back BAC when the BAC is less than $1. When the BAC returns to $1, BAB will be redeemed for $1;
3) BAS (Basis Shares) can collect the seigniorage surplus in the system.
I opened the Basis website and found that the Basis Cash, which was anchored at $1, sold for $403. It’s a good guy and crazy.
Stable coins are a big market. In addition to centralized stable coins such as USDT, BUSD, USDC, various algorithmic stable coins such as AMPL are also booming. Who makes the stable coin market so big?
The following is to sort out the characteristics of the BAC algorithm stable currency.
1. Basis Cash Algorithm Central Bank
There are many stable currency mechanisms, such as AMPL’s flexible stable currency.
Basis Cash uses an “algorithmic central bank” to manage the supply of tokens according to predetermined logic. This algorithm is responsible for balancing the supply of stablecoins and fluctuating demand, ensuring that the price of tokens remains relatively stable. There are two important contracts here: the vault and the board meeting room.
The existence of the treasury is to realize the redemption of BAB.
When the price of BAC is higher than 1 DAI, and the BAC balance in the treasury contract is positive. The vault will redeem BAB and return the same amount of BAC to the user.
When the BAC price is lower than 1 DAI, the vault is not allowed to redeem it in order to avoid the BAB holders from reducing their losses prematurely and causing unnecessary downward pressure on the BAC price.
Since the price of BAC may experience significant fluctuations during its initial distribution (the first 5 days), the vault plans to start after the end of the initial distribution (starting from the 6th day of listing) to give the BAC market enough time to stabilize, after which the agreement effectively uses the stability Mechanism to prevent further deviation of prices.
2) Board meeting room
The board of directors allows BAS shareholders to request the excess BAC stipulated in the agreement (see below for excess BAC). BAS holders can link their proportion to the board of directors contract, and they can get the proportion of BAC tokens allocated to the board of directors.
2. Basis Cash Stability Mechanism
The Basis Cash agreement is designed to ensure that BAC tokens are exchanged at a value of $1, and the stabilizer (the stability mechanism within the agreement) is responsible for adjusting the supply of BAC to match the demand.
Every 24 hours, read the time-weighted average of the BAC-DAI exchange rate from the Uniswap v2 contract, and then pass it to the Basis Cash agreement for its stability mechanism reference.
When the BAC price is higher/lower than (1+ε)DAI, the stability mechanism will be triggered, where ε is a parameter that defines the stable range of BAC token prices, and the initial value of ε is set to 0.05.
1) Tightening strategy
At any time, BAB can be purchased from the agreement in exchange for BAC.
The purchase of BAB is carried out at the price set by the algorithm. For example, when the price of BAC is x DAI, BAB is sold at the price of x BAC (effective price is x^2 DAI), and BAB holders are promised a premium when they redeem . When the conditions are met, BAB can be converted to BAC.
Of course, if the price of BAC exceeds 1 DAI (x>1), BAB can still be purchased, but the purchase is definitely a loss. For example, when 1BAC=1.1DAI, BAB is sold at a price of 1.1BAC, and 1BAB can only redeem 1BAC.
Therefore, BAB purchases are only expected to occur when 1BAC transactions are lower than 1DAI. Although it is still possible to buy BAB when the agreement allows the BAC price to be higher than $1, in order to avoid user confusion, it is disabled in the front end of the basic cash.
2) Expansion strategy
When the price of BAC is higher than (1+ε) DAI, the system will generate totalSupply*(oraclePrice-1) new BAC tokens.
According to the BAC balance of the treasury, the newly issued BAC is either deposited in the treasury or in the board meeting room.
If the treasury has a balance of more than 1000 BAC, then it can be reasonably assumed that either all BABs have been redeemed, or no BAB holders are currently willing to redeem. Either way, it shows that there is no need to redeem the BAB, so the newly generated BAC is provided to the board meeting room contract.
If the balance of the treasury is lower than 1000 base cash, it is assumed that there will be additional BAB redemption requirements for BAC. Therefore, the issued BAC is transferred to the vault so that the holder of the BAB can exercise the redemption right.
3. Basis Cash issuance method
Basis Cash has no private placement, no pre-mining, and no reservation.
The initial allocation of BAC is in the form of mining, which can be mined with DAI, yCRV, USDT, SUSD and USDC. A total of 50,000 BACs are distributed and 10,000 BACs are mined every day. The tokens are evenly distributed to each StableCoon pool, and the StableCoon deposit for each account is limited to 20,000 tokens.
750,000 BAS are allocated to those who provide liquidity for the BAC-DAI Uniswap v2 pair. 6250 BAS will be distributed every day, and the distribution volume will be reduced to 75% every 30 days. For example, 4687.5 BAS will be distributed every day from the 31st day.
BAS’s will also be allocated to the liquidity providers of the BAS-DAI Uniswap v2 pair. In one year, a total of 250,000 BAS will be allocated, and the same amount of tokens will be allocated every day.
PS: The above is some basic information sharing of BAC. Mining is risky. Participation needs to be carefully considered. I have not participated in BAC mining at the time of writing.
Reminder: The above data and all opinions are for reference only and do not constitute any investment advice.