Hotpot: An Oversimplified Experiment in Algorithmic Central Bank
🍽️ The Protocol
Hotpot is an experimental protocol mashing up food memes, programmable money and yield farming. It features:
- an algorithmic monetary policy to seek eventual price stability, inspired by Basis and Carbon.money.
- a fair and familiar distribution mechanism inspired by YFI, YAM and SushiSwap
- a great food meme symbolizing the core values of community bonding — Hot Pot!
At its core, Hotpot implements an oversimplified version of algorithmic central bank: when the token price is above target, more tokens will enter circulation through accelerated staking rewards; when price is below target, supply increase will be suspended and incentives will be applied to pull tokens out from circulation, so that price peg can be re-established.
A farming contract is adapted from Sushiswap (credits to @nomichef) to serve as the token distribution portal. An admin contract monitors the token prices and updates token production rate by preset rules. Please refer to the Cooking Rules below and Hotpot’s open-sourced codes for details.
🍲 Token Distribution
POTs will be distributed through YFI-style farming: anyone can stake eligible tokens into the corresponding pools. Once done, they will start earning tokens when reward starts.
At every block, 100 POTs will be produced. New tokens will be distributed pro-rata to stakers of each pool. Once Hotpot goes live, community can vote to add eligible pools and to adjust the weight allocation.
🥡 Join the Franchise
For every 100 harvested POTs, 2 extra POTs will be paid to a wallet address assigned by the front-end interface. Front-end developers are most welcomed to open their own shops under the Hotpot Franchise. Please refer to our codebase and ABI for the details!
👨🍳 Chef and Dev Fund
The Protocol is built by an anonymous team who believes in open finance. Although our intension is nothing more than a monetary experiment, we would be delighted to step out and bring Hotpot forward, if the Hotpot idea is accepted by the community.
An extra 10% of every POT minted is set aside for developers, in both technical and ecosystem perspective. We believe a dedicated reserve, serving as both incentives for early devs and resources for future governance, will help the long-term viability of this project.
🍙 Essential Info
Token Name: Hotpot Base Token
Token Ticker: POT
Token Address: 0x042aFd3869A47E2d5d42CC787D5c9E19DF32185F
GitHub: https://github.com/chefmao1/hotpot-protocol
Twitter: PotFinance
Discord: https://discord.gg/WPDcBTV
Hosted Interface: https://pot.finance
Reward Starting Block: 10908888 (around 09–22 08:00 UTC+8)
Projected Supply: ~10,000,000 POTs in first 2 weeks, with production halving every 2 weeks (88,888 blocks).
*The circulating supply is highly correlated to price volatility. See Cooking Rules for details.
🍱 Cooking Rules
You can check out the freshly-baked FAQ for simple explanations.
- Every pool can be staked with eligible ERC-20 tokens for freshly cooked POTs.
- Pool Selection: Below are the eligible pools at inception. They are categorized as White and Red pools.
- We made some special pools for UNI, SUSHI, YAM and AMPL communities because Hotpot is mainly built on the ideas/codes/infrastructures on these projects. These special pools will have their allocPoints halved every 2 weeks.
- Rebase: happening every 12h, upon which the POT production speed and Red/White ratio will be adjusted. The POT balances in your wallets WILL NOT CHANGE. Yes it’s exchange-friendly rebasing.
- Price Index: The initial Target Price of POT is 1 USD. The price index is calculated by dividing the average price of Uniswap USDT-POT pair by the Target Price:
- Red vs White: The production shares of colors are determined by the price index: White share is higher Price Index is above par, and Red share is higher when Price Index is below par. In particular:
- Circuit Breaker: when Price Index < 90%, the Hotpot will enter Circuit Breaker mode. POTs will continue to be cooked, but can only be claimed after CB ends, when Price Index resumes > 90%.
- Retarget: If Price Index > 110% for 2 consecutive sessions, Target Price will increase by 10%; if Price Index < 110% for 2 consecutive sessions, Target Price will decrease by 10%.
- Token Production and Halving: At inception, 100 POTs will be produced per block, subject to Production Multiplier when price is outside of thresholds. The base production rate will be halved every 88,888 blocks.
- Production Multiplier: The overall production speed will be higher when Price Index is outside of threshold (90% — 110%), in such cases:
- Long-term Supply: In the long run, token production rate will be taken over by target Stock-to-Flow ratio, which is set to be 10, corresponding to 10% annual inflation. Community governance will play a critical role in determine the Stock-to-Flow ratio.
- Tips: when claiming POT rewards, the user can appoint an address to receive extra 2% as tips. The tipping address will most likely be set by the dApp’s frontend provider. We hope this can encourage more interfaces being built the Protocol.
🔐 Security and Auditing
People want an authority to tell them how to value things, but they choose this authority not based on facts or results. They choose it because it seems authoritative and familiar.
— Michael Burry
The development of Hotpot Protocol took about 2 weeks. While over 50% of our time had been spent on code reviews, unit tests and UAT, it may still be far from the rigor of multiple formal audits. The hotpot-protocol comes with a minimal set of solidity contracts . Please review the codes with high caution before you put in any serious assets.
🚀 The Future
Like earlier monetary experiment projects such as Ampleforth and YAM, POT holds zero inherent value; any value which might accrue would be an entirely emergent property of the community who mint, keep and spend the tokens. The initial admin contract (ChefMao) is designed to be replaced by more sophisticated ones. The founding chefs are excited to see how Hotpot evolves.
