Introducing The Stablecoin of The Future : USDAO, Fully Decentralized, Collateralized & Community Governed
The price volatility of popular digital assets, such as Bitcoin, Ethereum, and others makes it difficult to be used as a common currency.
Hence, Stablecoins were designed and created to minimize this price volatility by pegging a single asset or basket of digital assets. It does this by representing the value of the underlying asset.
In other words, with the example of the US Dollar, it means that the stablecoin is pegged to the US dollar in a 1:1 ratio.
However, there are several issues with the existing stablecoins, around transparency and whether they are fully collateralized (in other words, if there is enough backing to ensure the stability of the peg).
The USDAO protocol is designed to address these issues, providing a stablecoin, that is transparent and simple to use, yet sophisticated enough for a wide range of different use cases for businesses and enterprises.
How are Stablecoins backed?
To maintain its stable price relative to the base peg, a stablecoin must be collateralized. In other words, it needs to be backed with some assets of value.
Many stablecoins are fiat-backed (entirely collateralized with existing nationally issued currencies such as the US dollar), with examples of this being USDC, USDT, and TUSD.
Other stablecoins are crypto-backed such as DAI . And some of them are purely algorithmic stablecoins (entirely algorithmic with no backing) like BASIS, ESD and DSD.
What is USDAO?
USDAO is a stablecoin, intended to serve as a global virtual currency, designed to keep simplicity, interoperability, and business compatibility at its core.
It works through a fully decentralized crypto-backed stablecoin protocol developed by RUIT Foundation called USDAO.
The inspiration behind the USDAO Stablecoin protocol was the realization of the need for an enterprise-friendly and fully decentralized protocol, which could be easily integrated into a business’s existing infrastructure for use as a stable currency across the world.
The vision of the developers was to create an interoperable stablecoin that was designed to be both as reliable as fiat currencies and could open new doors of possibilities for the creation of innovative products, services, and functions.
Despite the market being flooded with hundreds of stablecoin projects, very few provide the wide-ranging functionality of USDAO.
This serves to simplify transactions in business processes and extend limits for global transactions by offering faster and safer transactions at any scale.
Furthermore, as the protocol is maintained through decentralized governance, this affords many more advantages than other stablecoin protocols in terms of security, transparency, accountability as well as having the flexibility to evolve with the needs of an ever-changing market through Community Governance.
USDAO Tokenomics
The USDAO protocol is made possible and stable using two distinct tokens.
- First, the actual USDAO token, which is the stablecoin pegged 1:1 with the US dollar.
- Secondly, the ASSET token, which is the governance token of the ecosystem.
Using USDAO Stablecoin
Minting and Burning
When a user is looking to purchase or swap ETH for USDAO, they MINT new coins, and when they wish to swap their USDAO back to ETH, they BURN the tokens.
The easiest way to do this is to visit the USDAO protocol website at https://usdao.io and connect your wallet.
Once connected, you can mint new USDAO tokens, exchanging any amount of ETH for the relative number of USDAO tokens depending on the current price of that base crypto in USD.
USDAO Charges
A small fee for both minting and burning operations is applied, and this fee goes into the revenue contract to further maintain the USDAO ecosystem. Currently the Minting Fee is set at 0%.
Minting Example: the value of 1 ETH is currently $1000 at the time of writing
If a user wishes to exchange 1 ETH for USDAO, which would therefore be equal to 1000 USDAO
This provides them with a total of 1000 USDAO which is then deposited in their wallet.
When the user wishes to move back to crypto, they return to the USDAO platform and choose to exchange for ETH. Once complete, the USDAO tokens they were holding are burned, ensuring equilibrium in the circulating supply.
Burning Example: let’s say the value of 1 ETH has now dropped to $800.
The same user now wishes to exchange their 1000 USDAO back to ETH. This would be equal to 1.25 ETH (rounded to 6 decimal places for ease in this example)
The burning fee of 0.3% is applied on this ETH amount (amounting to 0.00375 ETH).
The user, therefore, receives back 1.24625 ETH to their wallet.
The user has, therefore, increased their ETH supply by 0.24625 ETH by conducting this trade in and out of USDAO.
Slippage
Users who are providing ETH for minting receive USDAO at a 1:1 ratio when minting up to 5% of the total collateralization, which means there is no slippage for those who mint lesser amounts of the USDAO Stablecoin (i.e. under 5% of the total collateral present in USDAO Ecosystem).
Liquidity Through OnVault Protocol
The USDAO pool is designed to ensure that the USDAO Pool is never undercollateralized, protecting users from forced liquidation.
To maintain Over-Collateralisation of USDAO Pool, it uses Onvault Protocol which is an 0% Interest free borrowing Platform built to maintain Peg stability of USDAO Stablecoin where the debt can be repaid anytime.
Users are Rewarded in ETH and ASSET token for staking USDAO Stablecoin in the Onvault Staking to stabilize the USDAO pool
Find out more about the ASSET token and OnVault protocol here:
ASSET Token Module | Get To Know ASSET Token
OnVault Protocol | 0% Interest Free Borrowing and Staking
USDAO For Businesses
Integrating the USDAO stablecoin as a payment channel into an existing business or enterprise is easier than any leading payment solution available in the market today, requiring only a linked blockchain wallet to send and receive payments in USDAO.
This makes USDAO a simpler and more efficient enterprise solution compared to traditional standard solutions that include registrations, KYC, complicated integrations, and high transaction fees.
The USDAO protocol is powered by the Ethereum blockchain and is also being further developed for use on a range of other leading blockchains.
Find out more about the USDAO developer tools : Developer Docs
Benefits Of The USDAO Stablecoin
As a P2P payment method for various applications, USDAO achieves the following key benefits for enterprises and individuals.
- Can be used as an unlimited time and space value storage solution.
- Can be utilized as a cross-border payment remittance and settlement network.
- Can be easily integrated into businesses for free using the extensive SDK toolkits, which have various use cases and allow developers to create new products and services inside existing enterprise infrastructures.
- Incentivizes holders and investors to earn rewards by staking, lending & investing USDAO.
- Has lower fees than many collateralized stablecoin competitors.
- Has complete transparency and auditability, governed by a fully decentralized community.
- Let users mint USDAO stablecoins at 1:1 ratio ( No Minting fees Currently) with no need to provide over-collateralization.
USDAO Decentralized Governance
USDAO protocol has implemented SnapShot for its Decentralized Governance.
Conclusion
The USDAO protocol is a self-sustaining, fully decentralized, and transparent ecosystem, developed specifically to solve some of the problems in the existing stablecoin market.
The USDAO protocol provides crypto users and businesses with fast, low-cost, extensible, and state-of-the-art solutions, across a wide number of use cases and models.
USDAO solves many of the problems inherent in existing stablecoins in a balanced and transparent way, whilst maintaining systemic integrity, simplicity, and interoperability.
USDAO Protocol Rollout
At the time of writing, the USDAO protocol is currently in the pre-rollout phase. Prior to the full launch of the USDAO protocol, the plan is to grow the initial community, with the token sale of ASSET occurring once sufficient interest has been established.
The 97% of proceeds from this sale will be used to Collateralise the USDAO pool, the remaining 2% will be used for creating Liquidity Pairs in DEX and the 1% will be used for USDAO Awareness, Community Marketing and Audit.
Full rollout of the protocol will occur once the initial sale of ASSET governance tokens has been completed.
This rollout is expected to occur on Q4 of 2022.
You can see the full roadmap here.
Find out more about the USDAO protocol
Full details, along with updates and the latest news, are available on the project website usdao.io.
Subscribe to stay updated about the potential use cases building on top of the USDAO protocol.
Developers and business owners can also view the documentation detailing usage cases and instructions on how to integrate USDAO into existing solutions.
Stay tuned for future updates. Follow @USDAO on all leading social media platforms and engage with us with your community.
