Welcome to the 10mb Finance Frequently Asked Questions page!
Shut up and take my money! Which buttons do I press to ape?
Why does 10mb Finance exist?
Excellent question! I'm glad you asked. Algorithmic stablecoins have become quite popular. However, two of the major stablecoin protocol archetypes out there, Tomb Finance/Dark Crypto and Frax/Iron Finance, both seem to have substantial weaknesses that have prevented them from having a long life expectancy. 10mb finance addresses those weaknesses to create a more sustainable system.
What is the big problem with Tomb forks?
In Tomb forks, the bonding mechanism often fails to restore the peg on its own. When bonds are purchased, the supply of peg token goes down, but this does not directly cause spot purchases. Therefore, the spot buys necessary to restore the peg often fail to materialize.
What was the big problem with Iron Finance?
In Iron Finance, the peg token was always redeemable for 1 USD worth of tokens, providing an incentive to buy when the price was below peg, unless time-weighted average price (TWAP) oracle issues with the Titan (share) token prevented the numbers from adding up. However, the Titan token had no intrinsic source of value. It only had two purposes, minting/redemption of the peg token and generating yield in a pool, which were not a sufficient raison d'etre when people sold Iron, the peg token. This, combined with a Titan price oracle with a TWAP period that was too long, meant that Titan could quickly drop to zero price, causing the system to collapse.
How does 10mb solve these problems?
In 10mb Finance, the Seigniorage system of Tomb and the Fractional Collateralization system of Iron Finance operate in parallel. The 10SHARE token is the governance token of both systems, and both systems should strengthen each other. This addresses the shortcoming of Tomb because the redemption system provides a direct buying incentive when 10mb is below peg, which the Tomb bonding system lacks. It also addresses the shortcoming of Iron Finance because the single 10SHARE pool emits 10mb, giving it an intrinsic source of value. Therefore, its price should not drop to absolute zero, as Iron Finance's Titan token did. Furthermore, the 10SHARE TWAP period has been set to 45 seconds, as opposed to the 10-minute period used in Iron Finance, so the redemption system should maintain its effectiveness in all market conditions.
What should happen when the 10mb price is over peg?
- A minting discount below spot price should encourage minting, which could add USDC to the treasury at more than 0.1 USDC/10mb
- This increases the effective collateralization ratio
- The protocol issues new 10mb to the 10SHARE pool
- 10BOND redemption bonuses are available above peg
What should happen when the 10mb price is under peg?
- No new 10mb is produced as 10SHARE staking rewards
- 10mb is removed from the circulating supply via 10BOND purchases
- 10mb can be purchased from the market and redeemed for 0.1 USDC worth of USDC + 10SHARE tokens
What are the risks?
This system is highly experimental, so invest at your own risk! We have done our best in putting the system together, but the proper tunings cannot be determined by direct experience.
We anticipate building a redemption treasury through minting. However, not all 10mb will enter the supply through minting: some will be emitted by the 10SHARE pool. Therefore, the effective collateralization ratio (ECR) may decline. A decrease in ECR would reduce the amount of USDC and increase the amount of 10SHARE received in redemption.
The 10SHARE token can be received from more sources than the share token in a standard Tomb fork. There is a pre-programmed amount emitted via pools, which is normal for Tomb forks, but it is also minted during the redemption process. This redemption minting takes place at the time-weighted average price (TWAP), meaning that an arbitrary amount of 10SHARE could be minted, although there is flash attack protection.
Who is on the team? Aren't you kind of an asshole?
Ser, wen AMA?
How can I learn more?