The training wheels for the SORA economy
- Token Bonding Curve Dollar (TBCD) is a new proposed, algorithmic, non-synthetic stablecoin that has its value maintained by the SORA token bonding curve
- TBCD is created to be worth slightly less than $1 when XOR is far lower than the current price point on the token bonding curve, reducing sell pressure to XOR when the price of XOR is low
- TBCD will help to build up the reserves of the SORA token bonding curve, while also being used to fund the creation of new goods and services via on-chain referendum decided by all XOR token holders
- As a result of the implementation of this proposal, XST will no longer be minted to pay for project development
Token Bonding Curve Dollars (TBCD)
The SORA ecosystem has grown over the years and now there are many tokens and eclectic builders. With growth comes maturity, and SORA has recently been moving towards spinning out XSTUSD, a synthetic stablecoin, into the comprehensive SORA synthetics (XST) platform. There are many reasons to move synthetic assets to their own platform, but the main reason is so that XOR, the native token of the SORA network, can focus on being the token for real economic transactions and not be potentially diluted to enable liquidity for synthetic assets.
However, many of the partners we engage with for institutional projects are not ready to price everything in XOR just yet. Instead, they need a token that is readily convertible to XOR on-demand, yet pegged to the USD.
TBCD (Token Bonding Curve Dollar) aims to fill this void by being a token that is convertible to XOR, as a reserve asset of the SORA token bonding curve, while also being worth $1 because the token bonding curve always treats TBCD as having the value of $1 USD.
As you may recall, the SORA token bonding curve is a smart contract, built right into Polkaswap, which mints XOR in exchange for reserve assets, and burns XOR to return the reserve assets. There is a margin of 20% between buy and sell functions, which is used for buying back and burning VAL, providing funds for future VAL DAOs, as well as to put into accounts that in the future can be used for project funding, and giving stipends to SORA citizens.
TBCD can only be created and allocated by on-chain governance, which means that XOR token holders decide the supply. In this way, TBCD can contribute to the productive economy of SORA because builders can be funded in TBCD, which can lead to more uses for SORA ecosystem tokens. XOR is not diluted in purchasing power, because any minting of XOR is done only by giving TBCD to the token bonding curve, so TBCD becomes an asset that balances out any XOR put into circulation; in fact, the token bonding curve over-collateralizes, since there is a 20% margin between buy and sell, and part of that margin is XOR that goes into funds that are not currently put into circulation.
Because the SORA token is going to target a price point of around $600, this means that TBCD will have little utility if XOR costs $600, while the secondary market price is so much lower (currently it is $3). To make TBCD useful, instead of using the ~$600 price point, it will be able to buy XOR from the TBC at the current market price + $1. This is still higher than the market price, which will incentivize people to avoid dumping TBCD for XOR when the XOR price is low (because they won’t get a full $1 of value). For example, if XOR is $3 then TBCD holders can buy XOR from the token bonding curve for a 33% premium, which is not very appealing, but if XOR is at $100, then TBCD holders can buy XOR for just $101, which is a negligible premium. Eventually, the premium can go away entirely, when XOR is at the nominal token bonding curve price.
As with other token bonding curve reserve assets, the sell price of XOR for TBCD from the SORA token bonding curve will be 20% less than the price for buying.
Algorithmic Central Banking
TBCD is a great example showcasing the possibilities of the SORA token bonding curve to create monetary innovation for the SORA economy. TBCD solves both the question of how to fund the SORA economy’s productive expansion (the creation of new goods and services) and how to build up reserves in the token bonding curve to create a backing aimed at increasing the stability of XOR. By minting TBCD via on-chain referendum, builders can get the resources they need to buidl up the SORA economy and platform, while any TBCD they sell to the SORA token bonding curve will be owned by the SORA ecosystem as protocol-owned liquidity.
While not operating at the official token bonding curve price, TBCD still acts as a form of “training wheels” for the SORA economy, where the token bonding curve can be activated and build up some assets, selling XOR via a primary market at a premium to the free-floating secondary market.
The Booty Call Dollars
Introduce SORA who leading the game,
TBCD brings much fortune and name,
It combines with algorithms to set a stablecoin fame,
Put it in your cryptos and watch the benefits go up like a flame!
TBCD is here to stay,
Making money come your way,
Minting it is just the way,
Gotta pool in before starting a new day
Them Booty Call Dollars is the game we play
TBCD is THE stablecoin for crypto degens. Algorithmic and uncensorable, farming TBCD on the Demeter platform will also be possible, which opens up many new possibilities for TBCD hodlers! Being a reserve asset of the SORA token bonding curve, it’s also got infinite liquidity. Put together, these properties make TBCD truly groundbreaking in both the SORA economy and the overall DeFi space.
Moving Forward with TBCD
To implement TBCD and make it a reality, first the SORA token bonding curve should be modified to add TBCD with its special pricing logic (e.g., treating TBCD as always being worth $1 and selling XOR for TBCD at market rate + $1). Then the community should vote on deploying these changes. Finally, to have some TBCD in circulation, the community should mint TBCD to pay for development work, services, infrastructure, and all other costs that are accrued to the SORA ecosystem, including for any future social insurance for systemically important infrastructure payouts.
Overall, TBCD is an innovative stablecoin that uses the SORA token bonding curve to maintain its targeted price stability. This is a great development for the cryptocurrency market, as it provides users with a reliable stablecoin that’s linked to the value of the U.S. dollar. Furthermore, the SORA token bonding curve helps increase the liquidity of TBCD, making it easier for users to buy and sell the token.
Finally, if this proposal is enacted, XST will no longer be minted for funding development of goods and services in the SORA ecosystem. This will have the effect of making the SORA Synthetics platform more successful because the tokenomics can focus solely on providing liquidity for XST synthetic assets (such as XSTUSD), instead of providing project funding as an after thought.
About SORA, Polkaswap, and Fearless Wallet
SORA is a new economic system aimed at creating a supranational multiverse economic system with built-in tools for decentralized finance (DeFi). The SORA network implements a new way of parachain architecture on Polkadot and Kusama network, with the capability to bridge external blockchains (like Ethereum) to the Polkadot ecosystem.
One of the DeFi applications that will run on the SORA network is Polkaswap, a noncustodial liquidity aggregating, cross-chain AMM DEX designed uniquely for the Polkadot ecosystem with boundless liquidity through its one-of-a-kind Aggregate Liquidity Technology (ALT).
Fearless Wallet is a bespoke mobile wallet designed for the decentralized future on the Polkadot and Kusama ecosystem, with native support for iOS and Android platforms. A premium user experience, fast performance, and secure storage for your accounts. Fearless Wallet will integrate Polkaswap for easy, decentralized swaps of assets.