Introducing PolkaCash Protocol
We are proud to introduce to you the new decentralized algorithmic protocol, PolkaCash Protocol.
PolkaCash Protocol is a self-regulating permission-less stablecoin, with a USD peg that is algorithmically programmed to maintain stability through community-driven demand and supply mechanisms, by controlling money supply similarly to how central banks of the world guide the value of fiat money through monetary policy. By controlling the quantity of money supply in an economy by buying or selling bonds, a target value can be achieved (In this case 1 USD). Instead of a central bank or a currency board, rules are set and executed programmatically via smart contracts so that behavior of the system can be predictable.
Several different designs of algorithmic stablecoins such as Basis Cash, Mith Cash and Emptyset Dollar have launched with ingenious mechanism designs and amazing communities. Each attempts to bring stablecoin price peg back to neutrality of 1 USD. During expansion this would be a happy problem to solve as an increase in supply provides for all. However, much can be said when prices drop below the peg. Current solutions mostly revolve around utilitizing bonds as a means of reducing circulating supply. Technically that’s the right assumption, but practically from observation, there are quite a number of flaws with this approach. Firstly, bonds that were bought has an expiry to it, meaning to say that the risk of purchasing a bond too early would be highly risky without recourse on the stablecoin capital utilized to purchase it. Secondly, burning supply via bond purchases has a loose beta relation to the price of the stablecoin as it does not trade out in the open market (thereby unable to affect prices). Therefore, we propose an improvised iteration of a treasury function for purchasing the stablecoin in the open market to re-peg the price of the stablecoin when it goes below 1 USD.
Upon every expansion of stablecoin supply when prices are > 1 USD, up to 10% treasury fee would be taken from the expansion and used to purchase ETH. When prices of the stablecoin drop below <1 USD, as an additional mechanism to the bond purchase function, a purchasing event would be triggered by the Treasury on Uniswap through the open market bringing stablecoin prices back closer to 1 USD.
Currently, PolkaCash is launched on Ethereum, with a Polkadot protocol under development. Users holding POC and POS will receive airdrops during the Polkadot migration to seed the community once the protocol development is completed.
Some of the key features of the innovative seigniorage approaches are:
- Three Tokens System - The protocol comprises three tokens:
POC, which is the stablecoin that is pegged at 1 USDC;
POS, which is the non- stable governance token that will accrue fees, seigniorage revenue, and excess reserve value;
POB, which is the bond token to incentivize changes in the POC supply when POC < 1 USDC
- The Reserve Mechanism- Whilst there are numerous stablecoins, the Reserve Mechanism has proven to be the most effective thus far in providing stability, and is at the core of what we are building. The model works as such:
If POC is trading above 1 USDC, it uses up to 10% of the rebase to purchase ETH, which it stores in the treasury, to be utilized via the Reserve Mechanism. Conversely, if POC is trading under 1 USDC, it supports the price using the treasury via direct market clip buybacks.
- Decentralized Governance : Whilst the community is completely responsible for governance, the protocol functions on a highly autonomous, algorithmic model that works without interference.
- Full on-chain oracles - Use of Uniswap (USDC, USDC time-average prices)
- Direct Swap Policy - Automated market makers like Uniswap utilize swap-based trade functions.
- No team tokens, no premine: Everyone acquires tokens the same way. The token distribution has been programmed to be as fair and transparent as possible to ensure the long-term success of the protocol.
PolkaCash Minting Overview
At the genesis, PolkaCash will be supporting twelve (12) assets for minting. PolkaCash will focus on distributing POC to those who deposit the following to the token contract.
Stablecoins: DAI, USDT, USDC, USDx, ESD and FRAX
Community Tokens: UFT, INJ, BNB, RAMP, FIRE, DUCK
240,000 POC tokens will be distributed evenly across all 12 tokens listed above in the genesis distribution at the rate of 48,000 POC tokens per day over 5 days.
Concurrently, Polka Shares (POS) would be distributed to those that provide liquidity to the Polka Cash(POC)-USDC Uniswap v2 pair. Users will be able to deposit LP tokens to the distribution contract and earn Polka Shares.
The POS pool 1 will distribute 600,000 Polka Shares, starting with 5,000 Polka Shares and decreases 80% after every 30 days.
The POS pool 2 will distribute a total of 230,000 Polka Shares over the course of 1 year. The protocol distributes 630 Polka Shares per day
PolkaCash LIQUIDITY PROGRAM/STAKING
PolkaCash allows anyone to provide liquidity and earn Polka Share (POS) as reward.
There will be two (2) initial liquidity pools (POC — USDC & POS — USDC). There are no deposit or withdrawal fees and anyone would be able to provide liquidity and provide their LP tokens for any period they choose.
LP stakes are multiplied by two boost factors: time locked & rebase. The rebase boost applies to the base emission rate of POS, so an increase in the rebase boost means more POS distributed across the whole system.
The time boost applies to an individual’s stake as a proportion of all of the stakes in the pool, making it a zero-sum outcome when someone gets a boost from time locked stake. However, a time locked boost will increase the amount of POS a single user gets by increasing their proportion of the pool which decreases the proportion of rewards for everyone else in the pool.
The idea is to help to balance the risk/reward of locking liquidity into the system for a fixed amount of time. Time locked staking is intended to further reward LPs who have a long term belief in the POS Protocol and want to commit to providing liquidity for a long period of time. If any pool emission rate is changed due to a governance action, the time locked stakes of the pool will automatically unlocked so that emission rates don’t change on LPs who have committed to locking funds in the pool.
- In conclusion, PolkaCash Protocol is a self-regulating fully algorithmithic permissionless stablecoin utilizing a three token system to reduce volatility and increase predictability of pricing balance.
- Decentralized Governance with no active management upon deployment.
- No deposit/withdrawal fees.
- Admin keys burned.
- No team tokens, no premine.
🌐 Website: https://polkacash.finance
📰 Telegram: https://t.me/polkacash
🐦 Twitter: https://twitter.com/polkacash
👾 Discord: https://discord.gg/PYJc3uPRxH
⬛️ Medium: https://polkacash-finance.medium.com
📁 Docs: https://docs.polkacash.finance