Standard Protocol Docs

Standard Protocol Docs

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Welcome to Standard Protocol πŸ‘‹

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This documentation covers all aspects of Standard Protocol's product update, Stablecoin design, user guides, roadmap, DeFi, DAO, etc.

What is Standard Protocol?

Standard Protocol is the first Self-Sovereign Stablecoin protocol that embraces and visions the truly decentralized form of Web3.0.

Empowered by its interoperable DAO ecosystem, Standard Protocol empowers its user with full control over its monetary system through a multichain DEX, a decentralized Oracle, and a non-reserve design for CDP using NFT.

Standard Protocol strives to innovate as the next-generation digital settlement currency and prides itself on its global movement to financial self-sovereignty.

Why Standard?

Stablecoins are either over-collateralized, fiat-backed, or algorithmic to secure their volatility. However, each of their examples was not able to decentralize their operations and often rely on centralized protocol reserves to the organization with the central authority. On the other hand, Standard only provides units of an account with smart contracts, providing full sovereignty with an equal set of rules.

This enables users to:

  • πŸ•Ή Have full control over its monetary system: Users need to verify from their generated set of rules without relying on its leaders or operators
  • πŸ’Ό Leverage his or her finance into business: Users can build their protocol related to the user's account
  • 🧯No custodial risk of collateralization: Users do not put collaterals in protocol reserve. They put them in their accounts.
  • πŸ“ˆ Unlimited scalability: Having a reserve currency from a project to back up its value means its funds are stuck in the network. Standard starts with the organic funds truly from its users and maintains its ecosystem only with algorithms representing each network value.

Our goal is to provide a global unit-of-account with fair and transparent sets of algorithms. They evolve with policies from decentralized governance.

Introducing USMβ€”β€ŠSelf-sovereign, Non-reserve, Web 3.0 Stablecoin

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Stablecoin is an essential matter in the full-of-volatility Crypto space. Minute by minute, cryptocurrencies fluctuate in their prices and Stablecoin is what allows them to trade by a solid reference.

There are many other friends and predecessors in the space that have come up with creative and intelligent solutions to deliver this important thing. As a protocol working to achieve the same goal, we highly appreciate their efforts and have been inspired by many.

After a lot of hard work and effort, Standard Protocol is excited to present MTR, a self-sovereign, non-reserve Web 3.0 stablecoin.

The problems we tackled:

1. Self Sovereignty

Web 1 -> Web 2 -> Web 3 = Read-only -> Read-Write -> Read-Write-Own (Eshita, Messari)

A true Web 3.0 stablecoin needs to give the borrower full ownership including the borrower’s assets exchanged for the Stablecoin. The typical design is a custodian model in which a protocol-controlled contract forms a reserve of borrower’s traded-in assets. The reserve is usually controlled by a DAO, but individuals do not have control over what they provide unless they are in the majority. This is conditional ownership and freedom.

Referring to the analogy of Eshita, the custodial design is more like Web 2.5

2. Non Reserve

In order to let the borrower have self-sovereignty, it's a necessity to be non-reserve and here, we define reserve as the set of funds under control by the protocol. Having a reserve introduces multi-step intermediary processes like voting and can introduce problems like voter apathy and community division. Being non-reserve eliminates these complexities in the protocol design.

3. Bear Market

Most stablecoins in the market are bull market materials. Most existing solutions to the bear market are not practical or have high barriers to entry, leaving out the general population from the game. These solutions include auctions, seigniorage, reserve buybacks + backstops.

Auctions bring complicated terms, intermediaries, and processes. In addition, users need to interact with raw smart contracts or run programmatic modules. This is definitely not for everybody. Indeed, only for the few.

Seigniorage and reserve buybacks + backstop possess reflexivity and these can always create death spirals when heavy redemptions come, crushes the confidence, and destroys backstop or share token reinvestments.

The ideal solution is one that allows any retail investor to easily participate and eliminate reflexivity with real benefit.

How we solve these problems:

1. NFT

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When a borrower opens a CDP (Collateral Debt Position), NFT (ERC-721) is minted along with the debt. This NFT represents the ownership of the CDP and is fully transferable. This means that the borrower has full ownership and has the freedom to spend not only the borrowed stablecoin but also the collateralized debt position at his own will. Custodial design only allows the bidirectional transfer of trade-in assets between the user and the protocol. On top of the ownership and the freedom, the self-sovereign design opens another market for the CDPs.

2. Collateral Liquidation on AMM

When a liquidation happens, liquidated collaterals are sent to the AMM pair of Collateral-Meter. This is one-sided collateral-only liquidity. Therefore, the amount of Meter in the AMM stays constant while only the amount of the collateral increases. This creates an arbitrage opportunity where anyone can gain from the trading Meter to the collateral through the AMM. This is easy for the general population (most crypto users already have experience trading with AMM on DEX), and the opportunity is provided to every holder.

With this design, in the bear run, collaterals are liquidated to the free market ASAP, and the market self-adjusts. One can simply trade Meter and gain instead of having to participate in an auction or governance token backstop.

*Users can interact with the Collateral-USM AMM on our DEX, and its experience is equivalent to trading. Users need to wait until liquidation happens, and once there is an arbitrage, execute normal DEX trade from USM to the collateral. Standard Protocol’s DEX has an arbitrage spotting feature to facilitate this.

In addition, metrics about Collateral-USM AMM will be provided in the UI.

What are the gains for STND holders?

1. Reward β€” Dividend Pool

As our ecosystem and the economic machine get bigger, more $USM is minted. $STND money machine provides fees that can be shared as dividends through $STND staking. $STND stakes get more fees sustainably and securely as the $USM economy expands.

$STND holders can bond $STND in our Dividend Pool, and claim the fee that we have collected from our DEX, receiving in the format of LTR, our Liquidity Token. We share this income stream as-is and hence avoid diluting $STND holders’ share. Learn more on

2. Growth β€”DAO, Treasury & Proposal

Our ambition is to build a fully decentralized protocol, to a certain extent, we intend to evolve our protocol to be similar to a publicly owned business on-chain, with shared ownership, revenue streams, and dividends distributions. We will empower every of our $STND holders to not just vote for the proposal, but also how the income sources will be and how the treasury should be spent.

What are the gains for USM holders?

1. Use NFT to buy purchase CDP

Sellers remove risks of liquidation via selling. Buyers get more collateral than the market price due to overcollaterization.

2. Our stablecoin hedges to collateral

Liquidation goes to dex for buying them in cheaper than market price with stablecoin.

When a liquidation happens, liquidated collaterals are sent to the AMM pair ofΒ Collateral-Meter. This creates an arbitrage opportunity where anyone can gain from trading Meter to the collateral through the AMM. In the bear run, collaterals are liquidated to the free market ASAP, and the market self-adjusts. One can simply trade Meter and gain instead of having to participate in an auction or governance token backstop.

Essence

Web 3.0 is an era of ownership and self-sovereignty. With USM’s design involving NFTs, users own both the borrowed USM and CDPs. On top of that, users don’t need to go through the hassle of reading heavy documentation to participate in the bear market opportunities. It’s just as simple as interacting with an AMM, which users have already been doing for a while in DeFi.

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πŸ’‘ Learn More?

→| Tokenmics→ | Roadmap→ | Whitepaper→

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