A synthetic asset issuance protocol and DEX based on the Polkadot
What is Coinversation?
Coinversation Protocol is a synthetic asset issuance protocol and decentralised contract trading exchange based on the Polkadot contract chain. It uses the token CTO issued by Coinversation Protocol and Polkadot(DOT) as collateral, and synthesizes any cryptocurrencies or stocks, bonds, gold and any other off-chain assets through smart contracts and oracles. Users can forge a certain synthetic asset by collateralizing CTO or DOT, such as U.S. dollars, and automatically have a long position in the asset.
The main functional modules of the entire system include: forging synthetic assets(MintC), DEX, collateral pools, fee pools, oracles, and liquidity mining.
Forging Synthetic Assets(MintC)
The synthetic assets issued by the entire system are all produced by users staking certain collateral. The initial collateral includes CTO and DOT, and the collateralization ratio is 800% and 500% respectively. In the future, the collateral and collateralization ratio can be adjusted through community governance. When users stake collaterals and forge synthetic assets, corresponding debts are generated. When the user wants to unlock the collateral, he must repay the debt, that is, destroy the previously generated synthetic assets.
At present, it is stipulated that the assets synthesized by direct staking of collateral are the stablecoin cUSD. That is, after users stake the CTO or DOT, the directly generated synthetic asset is CUSD, while other synthetic assets need to be converted by the user through contract trading in DEX. The price of cUSD is always defined as $1 throughout the system. All cUSD generated by all users is the total liability of the entire system, priced in cUSD.
Through contract trading, cUSD can be converted into any synthetic assets supported by the system, such as cBTC, cETH, and even cAAPL, cXAU linked to traditional assets such as stocks and gold, and supports long or short. The types of synthetic assets can be added by community governance. It should be noted that if the user simply holds cUSD after minting, it is equivalent to automatically shorting all other assets in the system.
It is an exchange that provides conversion of different synthetic assets and contract trading. Due to the design characteristics of CP, this DEX does not require a counterparty, and there is no issue of transaction depth. Users’ profit and loss is illustrated by the following example.
The collateral pool is the sum of synthetic assets generated by all users, and is priced in cUSD. According to the amounts of synthetic assets generated by each user, the debt pool also records the proportion of each user's debt. Whenever a new synthetic asset is generated, the debt ratio of the system must be recalculated. Examples are as follows.
Users trading or converting synthetic assets on the DEX will incur transaction fees. The fee ratio is tentatively set at 0.3%, and these fees all enter the fee pool. The fee is collected in cUSD, and all the fees are distributed to users in proportion to the debt. The system stipulates that only users whose collateral is the CTO can receive rewards, as an incentive for CTO holders. Because the CTO price fluctuates, it is stipulated that only users who meet the collateralization ratio are eligible to receive rewards.
Since the price of contract trading needs to be read from outside sources, the oracle is a very critical part of this project. In the initial stage, the system will use the centralized oracles provided by the project team, and in the future, it will introduce more secure decentralized oracles.
The remaining 50% of the token CTO is generated by liquidity mining, that is 50 million.
Liquidity mining is the module of issuing CTO tokens. Users can lock CTO or DOT here to get the rewards of CTO. The proportion of rewards obtained by CTO and DOT is different. It also stipulates that users who lock their tokens for liquidity mining must also put a corresponding proportion of CTO or DOT in the collateral pool to mint synthetic assets, to provide more liquidity for the entire system.
Realize a decentralized virtual asset issuance platform and contract trading platform, which can replace the perpetual/future contract functions of major centralized exchanges in the long term. even issue any type of assets on the agreement, in the traditional financial market To have a role to play.
Centralized contract exchanges have exposed more and more problems, and the entire industry needs a solution for decentralized contract exchanges. The project’s decentralized contract trading program has the characteristics of general DEX openness, transparency, anti-censorship, and no KYC. It is also because there is no counterparty in the project, it perfectly solves the problems of general DEX transaction depth and liquidity. We believe that the prospect of this project is very broad and it is a real DEX solution.
Coinversation Protocol was founded by a Ph.D. team in economics in the United States. It also has a technology development and operation team in China, with members from Alibaba, Ant Financial, Peking University, and other first-line technology companies and universities.