New Stablecoin Concept

General
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Introduction
Hello, my name is Elix Exo, small time web3 developer / designer, I’ve done a few things on AVAX C-Chain and Polygon POS around AMM x Orderbook hybrids and NFT CFAMM Liquidity.

Premise
So I heard recently Gnosis chain was looking to replace xDAI due to concerns of centralization risk with their new Sky stablecoin.

While I understand the Gnosis chain DAO will most certainly choose a reputable stablecoin with a proven track record of decentralization. I thought now would be a good time to present a concept for a new Stablecoin I may be demoing by q4 2024 or q1 2025 at the latest (though I could demo it sooner if needed).

Concept ; CFAMM
This new stablecoin, called “Link Dollar (DOHL)” is an “LP Rebase” asset which archives a $1 price without the need for collateral - redemption - minting - burning etc.

It works on the basis of CFAMM pricing, that is; every Liquidity pool on Uniswap style exchanges derives price as a comparison of “Token0” and “Token1” in the pool.

(Token0 balance / Token1 balance = Price)

Each buy adds more Token0 and subtracts Token1, thereby making Token1 more valuable, likewise each sell subtracts Token0 and adds more Token1, thereby making Token1 less valuable.

In this sense “Token1” is the listed token and “Token0” is the paired token, often something like wETH.

Concept : Rebase
Smart Contracts are highly programmable, tokens are databases within said smart contracts and are thus equally malleable.

The “Rebase” concept involves the token’s smart contract changing the balance of certain addresses under certain parameters, either adding or subtracting.

There have been a number of “Rebase” stablecoins in the past but as I understand; these changed the balances of every single holder based on the price and were very gas hungry when there were lots of holders.

In addition to these issues were the optics of these assets, a regular rebase stablecoin does not have a $1 price, but can fluctuate with the market.

Concept : LP Rebase
LP Rebase aims to achieve a $1 price by rebasing a target LP address.

This would be less gas intensive than existing rebase tokens and would give a $1 price.

This works as follows; the contract gets the LP address’s wETH balance, fetches the wETH/USD price from a target Chainlink address and calculates the following;

LP wETH balance * wETH/USD price = expected Token1 amount in LP

It then rebases the LP address to add or subtract units of Token1 (self) to/from the LP.

This function would be triggered each time a swap occurs, rebasing immediately before and after the actual swap within the same transaction.

Conclusion
Any sort of feedback is appreciated. We intend to build this token on Polygon POS but if there is interest from Gnosis chain we will build it here first.

3 Likes
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This mechanism seems interesting but it remains an algorithmic stablecoin (rebase mechanism) so in case of high volatility and use, is the Rebase mechanism strong enough to maintain the peg

I salute the innovation of this stablecoin, I had never seen that before

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Hi, thanks for the reply. Sorry I didn’t see your reply sooner, the notification got sorted in the “promotions” section of my inbox for some reason.

As for the stability, I believe it would be perfectly stable but we don’t know for sure until we implement it.

Last year we did a demo for a different stablecoin concept which used a kind of orderbook x AMM hybrid that enforced price from an oracle on every trade, this was perfectly stable, we’re still working on rebuilding it with adjustments and more features. More info Linked Here.

That aside, with the LP rebase token it will be more difficult since it works with Uniswap style CFAMMs. But EVM transactions are highly programmable, many functions can be called simultaneously within the same transaction.

We have done similar development for a regular rebase token with fees, this particular token deducted fees before the swap occured then executed the swap and performed rebase.
If you’re interested in this contract it can be found here though much of the relevant functions are standard rebase with fees.

In this same vein our LP rebase concept would first call ‘rebase’ when ‘transferFrom’ is called from a DEX contract, meaning the price is set to $1 before the user swaps, after the swap ‘rebase’ is called again, ensuring that the price remains the same before and after.

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Hmmm ok i see how its work, thx man for your update !
i will look the Dexhune-C project
God bless you and your innovative project !

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Thank you so much, I’ll be sure to post an update here once we have it fully implemented (on Polygon POS).

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