A standard delivers collaterized, interoperable Digital Assets on Polkadot
Built on Substrate, Standard Protocol is the first Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets, and will operate in the Polkadot ecosystem. It introduces a new paradigm for liquidity aggregation. In contrast to the previous generation of algorithmic stablecoins, Standard rebases its stablecoin supply in each era. It will act as the catalyst for the financial activities of other parachains, to enable leveraged trading and arbitrage via a built-in AMM. It will also include a protocol for synthetic asset markets by way of a decentralized oracle.
Key Features And Highlights:
1. Elastic Supply:
MTR issuance ratio (inverse of collateralization ratio) is fully controlled by governance within an epsilon range; However, when the MTR price goes out of the epsilon range, emergency shutdown executes and no more MTR will be issued for the rest of the era.
Starting from the next era, the system takes charge and adjusts MTR issuance ratio to stabilize MTR price to USD until MTR price recovers to 3 quarters of the epsilon range.
If MTR price is above USD, more MTR will be minted from collateralization in the next era.
If MTR price is below USD, less MTR will be minted from collateralization in the next era.
The total supply is adjusted to follow the ratio above.
Ampleforth (AMPL) uses elastic supply to rebase its total supply of tokens. Standard rebases its stablecoin supply in each era, and utilizes overcollaterization to mint its stablecoin, Meter (MTR).
Standard (STND) automatically rebases the collateralized stablecoin, in the manner of an algorithmic reserve bank with decentralized governance for STND holders. By rebasing the price in each era, the total supply of the stablecoin Meter (MTR) and the amount that can be issued are adjusted to peg Meter (MTR) to the value of USD.
Meter (MTR) supplies are measured in each rebase and adjusted with the medianized price from oracles.
2. Decentralized Oracle Ecosystem:
Oracles are used for generating synthetic assets from the stablecoin Meter (MTR). Standard Protocol treats oracles like validators for operating across the wide scope of the DeFi ecosystem.
Oracle clients from various sources (e.g. Binance, Coinbase, HydraDX, etc) can provide aggregated price information so that the price cannot be manipulated by a single entity.
Standard Protocol builds an oracle module to share block rewards with oracle providers. Substrate enables developers to split block rewards to other network participants in every era. Block rewards to oracle providers maintain an 8:2 ratio between validators and the providers in an era. The total block rewards in each era is 10% (governance controlled) of total STND produced in the era.
Oracle providers are selected using the phragmen algorithm.
Selected oracle providers have no fee.
Block can only have up to a certain number of oracle transactions recorded. This is to prevent too many oracle transactions taking up one block.
3. Market Efficient Liquidity:
Instead of hosting an auction for liquidating collateral, Standard Protocol deposits liquidated collateral to its AMM pair so that Meter (MTR) holders can purchase other liquidated digital assets. Standard protocol uses a built-in AMM module to provide liquidation in a more market efficient way where liquidated assets are utilized to conduct arbitrage trades.
Standard Protocol rewards stakeholders who find expired loans by giving them a percentage (10% or more) of the collateral. The rest of it goes to Standard Protocol's built-in DEX to provide arbitrage opportunities to stakeholders who use the exchange
4. Stable Base Price:
By being algorithmically stabilized through rebasing, Standard Protocol provides cash which can act as a base price. For speculating on a digital asset, Meter can be used to estimate how much the asset is worth with the price pegged to USD.
5. Interoperable Ecosystem:
Standard Protocol is a collateralized, rebasable stablecoin (CRS) protocol, working across different blockchains as a form of smart contract in each network. Together, the Standard Protocol ecosystem for interoperability represents a blockchain hub. Standard Protocol will be able to share price information to other chains or fiat assets without charging fees due to its self-sustaining oracle reward ecosystem.
6. RUNTIME Modules:
Standard Protocol is implemented using Parity Substrate and has 9 runtime modules built using pallets available in the Open Runtime Module Library (ORML). Here are the details for each of these modules:
a. TOKEN module:
The Token module is a registry which stores asset information about Standard Protocol and other chains. Derived from the ORML’s XCM token, Standard Protocol’s token module manages assets that flow in and out via Cross-Chain Message Passing (XCML) across parachains. Assets are managed with a unique identifier.
b. MARKET module:
The Market module in Standard Protocol manages pairs for the automated market maker (AMM) between each collateral and its stablecoin Meter (MTR). Derived from Uniswap V2 contracts, the AMM module facilitates trading in the Standard Protocol ecosystem. The module enables MTR holders to purchase other digital assets or provide liquidity to earn fees on every exchange in the market.
c. VAULT module:
The Vault module collaterizes other digital assets and generates MTR. MTR holders can generate other synthetic assets with price information provided by oracle providers.
d. STAKING module:
The Staking module uses NPoS(Nominated Proof of stake) mechanism to select validators and rewards them with their actions in each era. Staking module comes with other module sets, including authority discovery on authority key candidates for each block, authorship for recording block authors and following reporting modules: offences, babe, grandpa, collective for managing slashes, im-online for reporting liveness, treasury, bounties, tips for distributing slashed validator’s balance to communities.
e. ORACLE module:
The Oracle module is an election and price feed information module which stores prices from external data with asset IDs from the Token module as keys. Oracle providers are elected in every era with the amount staked from the users. Oracle providers produce price information and are rewarded in each era on each block reward. Prices are stored in the state, and oracle providers are reviewed in each era. If they produce outliers, they get slashed. The total reward for each oracle provider in each era is recorded by the Reward module and stakers can get their rewards by claiming them.
f. FARM module:
The Farm module models after the existing Solidity contracts that are used for yield farming projects in Ethereum. It distributes rewards proportionally based on staked amount and elapsed time. The Farm module will be used to reward liquidity providers who supply liquidity for each pair of assets consisting of MTR and some other asset.
g. REWARD module:
The Reward module manages the annual inflation rate through governance and stores the total reward for network participants in each era. With 5% initial annual inflation rate of STND, the reward is distributed to oracle and validator with 2:8 ratio. Other network participants (e.g. liquidity providers) can be added through on-chain upgrade of runtime.
h. DEMOCRACY module:
The Democracy module manages the governance for operating Standard Protocol. The module has access to all root methods for each of the runtime modules and holders can propose changes in the network. The voting rules follow the same rules laid out in the Polkadot wiki.
i. TREASURY module:
The Treasury module manages the funds collected from fees or slashes in Standard Protocol. The module is used for funding protocol developers, monthly payouts for operators and team, stability fee management, or tipping community members.