GCMoney
An algorithmic stablecoin and synthetic assets protocol based on Proactive Market Maker and Bonds

GCMoney Intro

While most popular algo stablecoins such as DAI, sUSD, MIM are based on a collateralized debt DeFi primitive, we can see some issues with the necessity of liquidations and the lack of stability during market crashes. Another type of stablecoins, such as TerraUSD or Neutrino USD, are collateralized by “mint-redeem'' arbitrage. The stability of those stable coins is based on the assumption that the price of a collateral asset will never drop to the point of a “bank run” situation.
As Defi evolves rapidly, new innovative algo stablecoin approaches are being developed, e.g. by creating fractional reserves, augmented by market making (Frax Finance) or systems based on incentive approaches (Fei Protocol). However, all of these protocol designs share the same problem: if the collateral price goes to zero, the algo stablecoins collapse, too. In addition, all stablecoins also rely on external price oracles. Fiat-backed stablecoins (USDT, USDC, BUSD), which are most popular and liquid, are now struggling with trust in the centralised entity.
To counter these issues, we will describe an algorithm for stablecoin minting based on two DeFi primitives: PMM (Proactive Market Maker) and Bonding.

Definition

  • $gcd - gc-dollar pegged to 1$;
  • $gton - collateral (reserve) token;
  • $bond - NFT with parameters: vesting time and allocation giving right to burn NFT in exchange to a certain allocation of $gcd after certain vesting time (for example 1 week). The price of the bond issued in exchange for $gton is discounted price, which is giving incentives for $gcd minters (example 0.5% for weekly bonds);
  • PMM (Proactive Market Maker) decentralised exchange with asymmetric bonding curves for bid and ask side where slippage depends on liquidity reserves. PMM has asymmetric liquidity and price controlled by the price data from oracles;

Algorithm

To mint $gcd a user is buying bonds for $gton from the MINTER-SC. After vesting time ends, the user will be able to burn the bond and use his $gcd stablecoin (staking, farming, trading, lending etc).
Funds from the MINTER-SC are going into the PMM liquidity pool to the “bid” side. At the same time the same $-value amount of newly minted $gcd tokens are going into the “ask” side of the PMM pool.
So, from each mint operation we can see that liquidity in the PMM $gcd/$gton pool is increasing. Any external users-traders are able to sell $gcd for $gton using this pool. The price of 1$ in this pool is maintained by oracles.
We can see that the total supply of $gcd is always growing 2x more than backing funds. But total supply has zero sense here since this liquidity is so called POL (protocol owned liquidity). The circulating supply (CS) has more sense for measurement since CS depends on minting and purchasing simultaneously.

Incentives

Instead of $gcd we can mint $sgcd - as a staked version of the stalecoin. The stakingstaling rewards are coming from minting $gcd or staking of the collateral asset or protocol fees from pmm trading or even all of them included.
Minters are incentivised by discount for the bonding and in the case of 0.5% for the weekly bonds we have 26% ROI for regular/professional bond minters.

Synthetics

Having stablecoin we can use the same collateralisation algo for other synthetic assets (like gold, oil, btc, indexes and stocks), but instead of $gton another collateral can be used, for example $gcd. It’s beneficial for the economy of the system because it’s increasing demand for the $gcd as a market token for synthetic assets.Multi-Collateralization
PMM allows the use of reserve assets at the same time for the stablecoin minting with the same bonding mechanics.