Introduction to Yield Stable Dollar

Since its birth, Bitcoin has challenged people’s understanding of the concept of “currency”.

Due to the drastic price fluctuations and volatility, Bitcoin has long been thought to lack the monetary function of the ‘Unit of Account’. It’s application therefore is used more as a native reserve asset in the crypto world. Stablecoins on the other hand have long been regarded as the crown of cryptocurrencies, and among them, the algorithmic stable coin, which is purely regulated by the market and driven by mechanism design without the need for overcollateralization, is the jewel in the crown.

Source of stability

The YSD stablecoin will be the second product of the Unisave and DFI.Money YFII communities (the first being the YFII moon landing version). YFII is the first YFI bifurcated DeFi aggregator protocol. All tokens are generated by the way of liquidity mining, known as the first Eastern DAO. Unisave’s improved Uniswap protocol for Y3D community incubation supports bottom-level mining, adaptive market maker algorithms and many other new features.

YSD was inspired by Andre Cronje’s ‘Yield stablecoins’ series of articles. We presented an experimental fair-initiated stablecoin project; A semi-mortgage, semi-algorithm form of stable currency alternatives — The Yield Stable Dollar (YSD) inherits part of Basis’s model features using a mechanism designed to anchor to the target price, as well as the Maker DAO mechanism, using other stablecoins as collateral assets to reduce price volatility.

Unlike MakerDAO, collateral in YSD is realized by providing liquidity between the YDD and other stablecoins in the AMM (Automated Market Maker), with no liquidation risk. In addition, when the price of YSD drops below a dollar, Similar to Frax, the YSD will use collateral assets stored in the AMM mining proceeds in YFII to preferentially repurchase the circulating YDD in the market and destroy it. Finally, the YSD itself will act as a medium between Unisave and other stablecoin trading pairs, forming a Single Sided Liquidity to increase the throughput of Unisave pairs to handle stablecoin trading.

Compared with existing stablecoins, YSD has the following characteristics:

Three-token system

YSD has the classic Basis three-way card mechanism through Bond and Shares to adjust the price of YSD. They are:

1. Yield Stable Dollar ($YSD): A stablecoin; the pact aims to keep its value pegged to $1.
2. Yield Stable Bonds ($YSB): A bond issued by the system to repurchase $YSD when the price is less than $1.
3. Yield Stable Shares ($YSS): When the price of $YSD is higher than $1, and all $YSBs have been redeemed, a certificate for continuing acceptance of the newly issued YSD.

Stabilization mechanism

1. Deflation: When the price of $YSD is less than $1, the user will first be able to trigger the Treasury to use the mining proceeds to repurchase the market $YSDs and destroy them. When mining proceeds are exhausted and the $YSD price is still less than $1, users can purchase $YSB at a discounted price using $YSD.
2. Inflation: When the price of $YSD is higher than $1, AMM will start accruing mining revenue and users will be able to accept the $YSBs they purchased. When most of the $YSBs in the market have been accepted, more $YSD will be sold as Total Supply (YSD) x (price (YSD) — 1) Is issued to the $YSS holder.

Single Side AMM

Medium of exchange

By establishing virtual liquidity in Unisave, the exchange rate between YSD and other mainstream stable currencies will be stable to a certain value. At the same time, YSD and other stablecoin trading pairs will only charge 0.1% commission, allowing any two stablecoin transactions to be completed through YSD twice. Unisave has Curve-like characteristics, while holding YSD can be directly converted into any mainstream stable currency through a one step transaction, making YSD has the characteristics of foreign exchange reserve currency.

Issuing mechanism

• YSD does not sell coins in advance to early seed investors, insiders or venture capitalists, nor does it have any start-up capital, allowing the supply to grow organically based entirely on market demand.

YSD pool

• The YSD system will first distribute 1,048,576 YSDs within 81 days for a period of 81 days. Usage will be divided into stable coin pools and community pools.

YSS Pool

• The YSS pool will be released 3 days after the start of the YSD pool for a total of 1,048,576 pieces over a period of 121 days.