MONEY: Ultra-Sound and First Interest-Bearing Stablecoin on Avalanche

Blockchain ecosystems require the capacity to store value in reliable pegged assets: welcome to the MONEY stablecoin.

TLDR

  • Three types of stablecoins: “dollar backed,” algorithmic, and over-collateralized

Types of Stablecoins

Let’s first introduce the types of stablecoins:

  1. “Dollar-backed” like USDT and USDC. We use quotes to describe “dollar-backed,” because these types of stables are meant to be backed 1-to-1 dollar-to-stable, but are often collateralized differently. As a rule, these stablecoins are managed by centralized organizations in opaque ways. Some of these stablecoins present a systemic risk to crypto.

The Ultra-Sound Stablecoin

MONEY is minted when Moremoney users deposit collateral and then borrow — it is therefore backed by real funds. In the event that the underlying collateral loses a predetermined amount of value relative to the loan, the position will be liquidated by market participants and MONEY will be removed from the market to close out the associated loan. This ensures that MONEY always remains over-collateralized.

Stablecoins trade via liquidity pools so users can move between different tokens, which is the context in which an over-collateralized stablecoins could lose peg. If a pool gets out-of-balance, at some point it will stop exchanging assets at a 1:1 ratio, and the stablecoin will lose peg.

The solution to this issue is to drive funds back through the pool by incentivizing users to do this themselves via a variable-interest rate model or to do it via forced-redemptions (closing-out loans). Most stablecoin builders choose one of these two models. We have chosen to move ahead with both, which is why we think of MONEY as the Ultra-Sound stablecoin.

The variable interest rate model will be in play at all times, which should keep the peg stable without having to resort to forced redemptions — while still having that option available in lieu of grave situations. We believe this will improve user experience (as most users do not appreciate having their loans foreclosed), while adding an optimal number of redundancies.

First Interest-Bearing Stablecoin on Avalanche

The majority of the interest collected from borrowers will be redistributed to MONEY stakers. We believe this will be a major use-case for our stablecoin, which will further improve the peg due to increased demand for simply holding the asset. The important part to note is that MONEY will be the First Interest-Bearing Stablecoin on Avalanche — a major development, on a chain we truly believe in.

This is just the beginning for the MONEY stablecoin. We will continue to build it and develop its utility, with all our might.

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Moremoney is a protocol for borrowing against your liquidity pool tokens and other interest and non-interest bearing tokens, while still earning a healthy APY.