Sable → Next Way Forward

I love DeFi, and there is no doubt about it. It is one of the best use cases we have for crypto, but for some reason, there doesn’t seem to be a desire to fix the actual problem (no, not UIUX; that is another glaring problem we need to fix). For Sable, let’s focus on the elephant in the room: Stablecoins. Stablecoins are the prodigal problem that DeFi enthusiasts want to solve. Nobody values anything in Bitcoin or Ethereum; it is always USD-denominated and will never change.

But what is the utter fascination with stablecoins? In an industry where volatility is the norm, we need stability to anchor us all down. So why do we need another stablecoin, and why you?

For those who don’t know, I’m Alex, the founder of Wombat Exchange, a novel single-sided multi-chain and cross-chain DEX that sits happily on seven different chains and counting. With just pegged assets, we have traded 4 billion in volume, a testament to our success and credibility. As a DEX, we have been around for over two years through the bull and bear, proving that we are here to stay. I also contribute to Sable Finance because I believe in Sable’s ethos — a genuinely decentralized stablecoin. Sable Finance is an idea that stemmed from the Liquity protocol with several revisions, but it has a lot of merits that add value to the Wombat ecosystem. A liquidity layer will need a stable asset, and Sable is the decision I have made for Wombat.

Why use stablecoins instead of just the typical ones? We already have USDT and USDC, which are huge in the current market. Do we need another stablecoin? We’ve all been scared of innovations in stablecoins throughout the crypto cycles with de-pegs. The answer is an emphatic yes. The world needs a decentralized and sustainable stablecoin with proper use cases. The current ones, I would argue, do not fulfill the decentralized ethos of crypto and are not sustainable enough. We need to think of it as a business.

Stablecoins represent the freedom of this world, which leads to all things that stabilize our lives. I am from Hong Kong, and the Hong Kong dollar is a USD-stablecoin. Stablecoins have been a part of my life for as long as I can remember. This peg has been the reason for Hong Kong’s success and is simultaneously a pain for many. If you want crypto to go forward, you need stablecoins. If you wish for the crypto-ethos to stand the test of time, you need a genuinely decentralized stablecoin.

My proposal for Sable includes a robust function mechanism that ensures deep liquidity. This mechanism is designed to withstand the test of time, ensuring that both $SABLE and $USDS remain relevant and valuable in the future.

One of the main issues for stablecoins is liquidity. Currently, the only ways to obtain liquidity for stablecoins have been incentivizing them with high APY or finding some giga-chad to provide liquidity. Still, I don’t think either is sustainable or makes sense and if you say this is how crypto “is,” then you should rethink it a bit — this would not fly in the real world or as a business. So, stablecoin protocols face a multitude of issues because they are complex.

1. The need for liquidity → You need a way for people to swap with low slippage, or they don’t trust it
2. The need to sustain liquidity → How long can this deep liquidity last, and how do we add it?
3. The need to have a proper peg → The public’s trust in it
4. A proper revenue-generating business → Is this even a sustainable business?
5. Use cases → What can we do with this stablecoin besides staking and earning yield?

We won’t disclose our partner(s) for making this happen; we will soon. We need to finish signing the docs and the terms, but here’s the basic idea.

Solution

If you are a revenue-generating business, you can solve 1, 2, 3, 4. The 5th problem can be solved as use cases can come in the future when steps 1–4 are complete.

• Part of the revenue will be used to deposit into the liquidity pools forever for permanent liquidity; this solves 1).
• As the business will generate revenue and is injected into the pool as forever POL, the liquidity sustainability 2) is solved.
• The revenue will be used to balance the peg, partly solving 3)
• The revenue will also be used to buy back $SABLE, Sable Finance’s Stability Pool, Wombat Exchange bribes, and further incentivize with our aggregators such as Magpie, Wombex, and Quoll.
• Revenue generation is vital for sustainability and also partly solves 3) and 4)
• 5) can be solved when the above is done

Visualize it like this:

A few points on Sable Finance

• We will deploy on multiple chains soon.
• Already on BNB Chain, Base
• Coming to Arbitrum, Optimism, Scroll, Ethereum, and more
• Exclusively using Pyth and Wormhole.
• When big enough, it will integrated into the Wombat cross-chain pool.
• We will develop proper use cases for USDS. We are also discussing using it as a collateralized and routing asset for different pools.

I will push out more announcements soon; thanks for sticking around.