# $ORDER

The ONC protocol produces 2 native stores of value: `$ORDER`, a **superstable** token, and `$CHAOS`, a volatile **metastable** token. `$ORDER` is 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.

## How it works

ONC's native token `$CHAOS` is a yield-bearing, volatile investment instrument – but with one key differentiator: a rising floor price. This permanently rising floor is made possible through the **stablecoin collateralization** of `$CHAOS`. Every token of `$CHAOS` is backed by a diversified reserve of stablecoins, and `$CHAOS` can always be sold back to the protocol at the floor-price backing for the stablecoins in the reserves.

The floor price for `$CHAOS` provides the token with a **minimum intrinsic value**. `$CHAOS` can 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 `$CHAOS`. Holders of `$CHAOS` may lock their `$CHAOS` in a vault and in turn mint an amount of `$ORDER` equivalent to the floor value of the `$CHAOS` they locked. When the floor value of `$CHAOS` rises, users can mint additional `$ORDER`. The maximum amount of `$ORDER` they can borrow is simply the current floor price of their `$CHAOS`.

When a user takes out a loan of `$ORDER`, their `$CHAOS` becomes **locked** as collateral. The user may retrieve their `$CHAOS` by repaying the loan to the protocol, which in turn burns the `$ORDER` and unlocks the `$CHAOS`. They may then use their `$CHAOS` freely as before. 

### Delegated peg

The ONC protocol stabilizes the value of `$ORDER` through **decentralized peg delegation**. The stability of the `$ORDER` token 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.

`$ORDER` is always treated as $1 from the protocol’s point of view. This dollar value is denominated in `$CHAOS` tokens. For instance, if the spot price of `$CHAOS` is $12, the protocol accepts 12 `$ORDER` to purchase an `$CHAOS` token. Similarly, an `$CHAOS` token can be sold back for 12 `$ORDER` tokens.

But an `$CHAOS` token can also be sold back to the protocol of 12 DAI, USDC, USDT or any other stablecoin in the reserves. This transitivity from `$ORDER` to `$CHAOS` and `$CHAOS` to an arbitrary stablecoin opens up an arbitrage opportunity if `$ORDER` wanders from its peg.

If `$ORDER` trades beneath its peg, an arbitrageur purchases cheap `$ORDER`, and uses it to buy `$CHAOS` at a discount. They subsequently sell the `$CHAOS` back to the protocol for a different stablecoin and make a profit off of the arbitrage.

If demand for `$ORDER` drives the price above its page, arbitrageurs have two options for acquiring inexpensive `$ORDER` from the protocol and making a profit by selling it on the open exchanges: 

* They may buy `$CHAOS` with a stablecoin of their choosing, sell the `$CHAOS` to the protocol for `$ORDER`, and then sell the `$ORDER` at a profit on an open exchange.
* They may buy `$CHAOS` with a stablecoin of their choosing, lock the `$CHAOS`, and take out a `$ORDER` loan. They then sell the `$ORDER` at a price higher than the peg. When `$ORDER` trades back down to its peg, they buy the regularly priced `$ORDER` and pay off their debt.

## Use cases for `$ORDER`

There are several straightforward use-cases for `$ORDER`:

* **Leveraging exposure to** `$CHAOS` **with zero liquidation risk**. By locking `$CHAOS`, a person may take out a loan of `$ORDER` equivalent to the intrinsic value of `$CHAOS`. They may then spend the `$ORDER` to purchase more `$CHAOS`. By repeating this process, they will increase their exposure to `$CHAOS`. Since `$ORDER` loans never exceed the value of the `$CHAOS` collateral, there is no liquidation risk.
* **De-risking stablecoin exposure**. Since `$ORDER` is 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 `$CHAOS` continues to return yield in the form of `$prCHAOS` tokens while used as collateral for `$ORDER` loans. This results in a loan that has a “negative interest rate” – in other words, a yield-bearing debt. People are free to hold `$ORDER` as long as they wish, deploying it as they see fit, and earning yield on their collateral all the while. 

## Fees

Since `$ORDER` is a 2nd-order stablecoin or **superstable** coin, it does not require special fee infrastructure to maintain its peg (such as DAI “stabilization fee”). And since the loan amount never exceeds the intrinsic value of the collateral (`$CHAOS`'s floor price), the loan will never be liquidated. And finally, since `$ORDER` is minted just in time by the ONC protocol – and not taken from lenders – there is no need to make interest payments on the loan (in fact, the loan has a negative interest rate, in the form of `$prCHAOS` yield users receive on their locked `$CHAOS`).

However, the creation of value with `$ORDER` minting cannot be truly frictionless, otherwise the supply of `$ORDER` would flood the market. There is accordingly one monetary policy fee set on `$ORDER` to control its supply: 

* A one-time “loan origination fee” when minting `$ORDER`, charged as a flat interest rate of the total loan.

## What is a "superstable" token?

The `$ORDER` token is called "superstable" owing to how it **delegates its peg** to standard stablecoins.  `$ORDER` is 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 `$ORDER` diversifies its exposure to many individual stablecoins, its own value is smoothed out and made durable.

As `$ORDER` contains exposure to many stablecoins, the diversification makes this asset an **ultra low-risk** store of value.