How is Ubiquity Dollar different from other Stablecoins?
We all know that stablecoins have long been a staple of the DeFi Ecosystem, over time, multiple stablecoins have come up with various novel use cases and collateral backing. While this creativity and experimentation has kickstarted a lot of growth, it has also led to dangerous situations such as the collapse of UST, which led to the loss of many users’ funds. Ubiquity is looking to learn from other stablecoins’ mechanics and build the Ubiquity Dollar: a stablecoin that aims to be the premiere stablecoin of the metaverse.
What is uAD?
Ubiquity Algorithmic Dollar (uAD) aims to be a fully collateralized stablecoin, that is built to be modular; the Ubiquity Dollar is easy to upgrade with built in transfer hooks and upgradeable contracts which help the team to safeguard the protocol from any monetary dangers. The team has spent years researching the strengths and pitfalls of other stablecoins such as DAI, LUSD, FRAX; Empty Set Dollar, Titan, UST and everything in between, to create a stablecoin that is made with stability, upgradeability, and scalability in mind.
How does uAD work?
The elastic supply function of uAD allows its value to fluctuate around $1 by controlling the supply of the stablecoin through its debt token Ubiquity Credits (uCR). When the peg of uAD is below $1, uAD holders will be able to burn their uAD for Ubiquity Credits. These credits will then be redeemable for uAD when the uAD peg is above $1. By capping the amount of Credits that can be redeemed, the Ubiquity Dollar can be shielded from any significant selling pressure from depegging the stablecoin.
What backs uAD?
Ubiquity Algorithmic Dollar aims to be backed by yield bearing stablecoin LP positions on Uniswap v3. With Uniswap v3, users can provide concentrated liquidity on their positions, and this has made stablecoin LP positions potentially worth pursuing. Because of this, we believe it is most prudent to back the Ubiquity Dollar with other stablecoins that are decentralized and secure. By using LP positions, not only can we provide our own liquidity to these pairs, we can also generate additional revenue through fees which will continue to strengthen uAD’s backing over time.
uAD also uses other elements within the Ubiquity ecosystem to generate revenue for its backing. For example, lootboxes and yield aggregator vaults will both provide revenue through the transactions that they require. Any instance of bonding will provide transaction-based revenue as well, but bonding also provides backing for uAD through the bond purchase itself.
Learning from other protocols, Ubiquity aims to be capital efficient with the collateral in its reserves and create new products and strategies that generate additional value towards the treasury and backing of the Ubiquity Dollar.
What is uCR?
Ubiquity Credits (uCR) serve as a volatile counterpart to uAD that exists as a representation of the debt of the Ubiquity Dollar protocol. uCR can only be redeemed for uAD when the time weighted average price (TWAP) of uAD is above $1.00 USD. Limiting the redemption rate mitigates extraordinary selling pressure that risks depegging the Ubiquity Dollar.
When the TWAP of uAD is below $1, users can burn their uAD for more uCR which they can later redeem back for uAD when the peg moves above $1 again, pocketing the profit made from the extra uCR earned.
What makes the Ubiquity Dollar different from other stablecoins?
When compared to other stablecoins, Ubiquity differs in that we are creating an easily-upgradeable, financially sound token that is intentionally designed to be the premiere stablecoin of the metaverse. Through our flexible currency system and loot box technology, we intend to provide a safe and stable environment for GameFi users to both buy into and cash out of their favorite projects. uAD also utilizes transfer hooks that offer the team granular control of uAD monetary policy. Examples of this include redirecting liquidity in a large sell transaction to offset the potential for situations that could depeg the Ubiquity Dollar.” Collateral can also be injected to pad the selling pressure to keep the peg safe.”
Ubiquity also believes that instead of building a stablecoin for all audiences, it is best to focus on being the best stablecoin of a specific niche. With heavy research and deep rooted partnerships in GameFi, we believe that the Ubiquity Dollar will be a valuable tool to stabilize GameFi economies by minimizing token volatility that could negatively affect the economy and user experience.
How can I benefit from uAD?
Users can profit from stabilizing the dollar. One of the primary strategies for this is to burn Dollars for Credits when below peg, and redeem Credits for Dollars when above peg. Redeeming Credits is a means to profit when the Dollar supply expands in the future. Another strategy is to add liquidity for our Dollar and farm the Ubiquity Governance (UBQ) token. The more liquidity we have for our dollar at peg, the harder it is to move the price from peg.
Users can profit from uAD in a few ways. You can burn your uAD for uCR when the uAD peg is below $1 and exchange the uCR back for uAD when the peg is above $1, pocketing the difference in the extra uCR that was minted earlier.
The price is able to stay at $1 because of money demand, confidence in the protocol, and the stability mechanisms the protocol uses to retain its price stability.
- When the price goes above 1$, new uAD is printed and given out as rewards, driving the price gently back to 1$.
- When the price goes below 1$, users are incentivized to take out coupons for future rewards in exchange for uAD, driving the price back up.
By staking assets into our bonding contract, you will also be rewarded for providing additional collateral and liquidity to the protocol. Arbitrage traders that keep the price at $1 (on Curve) are also provided with rewards.
For launch, there will also be bonding incentives to bootstrap liquidity for the protocol. We will be offering more information on that soon so make sure you stay tuned!
