The superstable token with decentralized peg delegation
The ONC protocol produces 2 native stores of value:
$ORDER, a superstable token, and
$CHAOS, a volatile metastable token.
$ORDERis a 2nd-order stablecoin that maintains its value of $1 through a fully decentralized peg. It is backed by a diversified basket of stablecoins, whose individual pegs strengthen & de-risk the peg for
$ORDER. By holding
$ORDER, you hold a superstable coin that is collateralized & stabilized by all others.
ONC's native token
$CHAOSis a yield-bearing, volatile investment instrument – but with one key differentiator: a rising floor price. This permanently rising floor is made possible through the stablecoin collateralization of
$CHAOS. Every token of
$CHAOSis backed by a diversified reserve of stablecoins, and
$CHAOScan always be sold back to the protocol at the floor-price backing for the stablecoins in the reserves.
The floor price for
$CHAOSprovides the token with a minimum intrinsic value.
$CHAOScan trade above the floor, but its value can never go beneath the floor price.
This minimum intrinsic value can be deployed as collateral for zero-risk loans at the floor price of
$CHAOS. Holders of
$CHAOSmay lock their
$CHAOSin a vault and in turn mint an amount of
$ORDERequivalent to the floor value of the
$CHAOSthey locked. When the floor value of
$CHAOSrises, users can mint additional
$ORDER. The maximum amount of
$ORDERthey can borrow is simply the current floor price of their
When a user takes out a loan of
$CHAOSbecomes locked as collateral. The user may retrieve their
$CHAOSby repaying the loan to the protocol, which in turn burns the
$ORDERand unlocks the
$CHAOS. They may then use their
$CHAOSfreely as before.
The ONC protocol stabilizes the value of
$ORDERthrough decentralized peg delegation. The stability of the
$ORDERtoken is derived from the stability of all other stablecoin implementations working together. This superstable token is not a specific algorithm for a stablecoin, but rather the combined, diverse forces of others. It is a 2nd-order stablecoin that is implementation agnostic.
$ORDERis always treated as $1 from the protocol’s point of view. This dollar value is denominated in
$CHAOStokens. For instance, if the spot price of
$CHAOSis $12, the protocol accepts 12
$ORDERto purchase an
$CHAOStoken. Similarly, an
$CHAOStoken can be sold back for 12
$CHAOStoken can also be sold back to the protocol of 12 DAI, USDC, USDT or any other stablecoin in the reserves. This transitivity from
$CHAOSto an arbitrary stablecoin opens up an arbitrage opportunity if
$ORDERwanders from its peg.
$ORDERtrades beneath its peg, an arbitrageur purchases cheap
$ORDER, and uses it to buy
$CHAOSat a discount. They subsequently sell the
$CHAOSback to the protocol for a different stablecoin and make a profit off of the arbitrage.
If demand for
$ORDERdrives the price above its page, arbitrageurs have two options for acquiring inexpensive
$ORDERfrom the protocol and making a profit by selling it on the open exchanges:
- They may buy
$CHAOSwith a stablecoin of their choosing, sell the
$CHAOSto the protocol for
$ORDER, and then sell the
$ORDERat a profit on an open exchange.
- They may buy
$CHAOSwith a stablecoin of their choosing, lock the
$CHAOS, and take out a
$ORDERloan. They then sell the
$ORDERat a price higher than the peg. When
$ORDERtrades back down to its peg, they buy the regularly priced
$ORDERand pay off their debt.
There are several straightforward use-cases for
- Leveraging exposure to
$CHAOSwith zero liquidation risk. By locking
$CHAOS, a person may take out a loan of
$ORDERequivalent to the intrinsic value of
$CHAOS. They may then spend the
$ORDERto purchase more
$CHAOS. By repeating this process, they will increase their exposure to
$ORDERloans never exceed the value of the
$CHAOScollateral, there is no liquidation risk.
- De-risking stablecoin exposure. Since
$ORDERis a decentralized stablecoin, it spreads out the inherent risk of stablecoins to a diverse portfolio. Stablecoin users do not need to yoke their capital to a single stablecoin but instead can diversify their exposure to collateralized, centralized, and algorithmic coins alike.
- Negative-interest loans. The locked
$CHAOScontinues to return yield in the form of
$prCHAOStokens while used as collateral for
$ORDERloans. This results in a loan that has a “negative interest rate” – in other words, a yield-bearing debt. People are free to hold
$ORDERas long as they wish, deploying it as they see fit, and earning yield on their collateral all the while.
$ORDERis a 2nd-order stablecoin or superstable coin, it does not require special fee infrastructure to maintain its peg (such as DAI “stabilization fee”). And since the loan amount never exceeds the intrinsic value of the collateral (
$CHAOS's floor price), the loan will never be liquidated. And finally, since
$ORDERis minted just in time by the ONC protocol – and not taken from lenders – there is no need to make interest payments on the loan (in fact, the loan has a negative interest rate, in the form of
$prCHAOSyield users receive on their locked
However, the creation of value with
$ORDERminting cannot be truly frictionless, otherwise the supply of
$ORDERwould flood the market. There is accordingly one monetary policy fee set on
$ORDERto control its supply:
- A one-time “loan origination fee” when minting
$ORDER, charged as a flat interest rate of the total loan.
$ORDERtoken is called "superstable" owing to how it delegates its peg to standard stablecoins.
$ORDERis a "higher-order" class of stablecoin, which maintains its peg through the diversified basket of reserve stables. Each individual stablecoin has some jitter to its price, but since
$ORDERdiversifies its exposure to many individual stablecoins, its own value is smoothed out and made durable.
$ORDERcontains exposure to many stablecoins, the diversification makes this asset an ultra low-risk store of value.