A hub for issuing, trading, lending and borrowing synthetic assets.
From the beginning of the civilization - when the demand for trading exploded. People were looking for a currency that had to embody the same five characteristics: relatively scarce, recognizable, divisible, fungible and portable. That’s how physical coins were invented. Its value was really really backed by its metal content. But when you have too many coins, you have to find somewhere to store them. And that’s how the bank was born. When you send your coin or your gold to the bank, you get the IOUs then whala, here comes the money. Since people’s trust in banks goes up, they don’t usually go and check if their asset is still there anymore. Instead, they used that IOUs paper (money) as a currency with the belief that their property is still inside the bank's vault. Nothing wrong will happen if the story ends here but the bank keeps printing the IOUs and this means the number of IOUs now is more than the real asset inside their vault. So when every owner of the IOUs came and took their assets. The bank went bankrupt.
Until now, the possibility that you lose all your assets is still there. That’s the problem Shadows Network team is trying to solve. Shadows Network will be the backbone of the Web3.0 store of value that will allow users to trade on-chain assets by anyone, anywhere. They focus on mapping real-world financial assets onto the chain through their agreement.
What is Shadows?
Shadows is a decentralized synthetic asset issuance protocol built on Substrate. The value of these synthetic assets is underpinned by DOWS, and as long as DOWS is locked in a smart contract, synthetic assets can be issued.
Unique debt pool design mechanism. Trading of synthetic assets is essentially a transfer between debts. Smart contracts automatically execute the conversion of a synthetic asset to another synthetic asset without an order book, without counterparties, and without the problems of liquidity and trading slippage.
Key Features and Highlight:
Synthetic Asset: The synthetic assets are secured by the underlying value of the DOWS, which the user pledges into a smart contract to create a synthetic asset and incur a DOWS denominated debt. In order to unlock their DOWS, the user is required to destroy the synthetic asset to settle the debt. Any synthetic asset shall meet a collateral ratio of 800%, below which the collateral cannot be redeemed. The collateral ratio requirement is a minimum of 180%.
Synthetic Asset Transaction Agreement:
The exchange of synthetic asset values will be supported by trading agreements.
Shadows trading agreement has several advantages:
1. Based on the design of the debt model, trading in synthetic assets is essentially a conversion of debt, with a smart contract executing the destruction of one asset (debt) and the production of another (debt). With this trading method, there is no need for counterparties or order books, and no need to worry about liquidity or slippage. It allows synthetic assets to be traded simply, safely and efficiently.
2. Through synthetic asset trading, it is possible to trade on an asset without actually holding that asset. This type of trading reduces the friction of asset exchange and allows for quick exchanges between different types of assets, such as Tesla shares, gold, bitcoin and other different assets, thus synthetic assets can help investors reach a wider range of assets.
Debt collateral lending agreement:
A lending pool will be available in the Shadows Network system where users can place debt (such as xUSD) into a lending pool smart contract to be lent. The borrower pledges the debt (synthetic assets such as xTSLA) into the lending pool, pays interest and receives a loan of xUSD due to the need for flexible funding liquidity. There is an automatic balance between supply and demand in the lending pool rates and the interest earnings generated will be allocated in proportion to the xUSD lent in the lending pool.
Holding DOWS benefits:
- Users can use DOWS to mint synthetic assets.
- Users will receive a part of transaction fee weekly.
- Users can turn DOWS to a stable coin - xUSD then deposit it into the lending pool to earn interest.
- Users who participate in the minting of synthetic assets will also receive a DOWS reward.
- Stake DOWS then receive DOWS once a week.
- Transaction fee and debit pool fee income will be destroy at a ratio of 30% per week.
- DOWS holders will have the right to vote on system governance.