How it works
Last updated
Last updated
HYDT Stablecoin is USD-pegged stablecoin backed by BNB collateral, using innovative soft-peg mechanism to keep it's peg in reliable and flexible way.
Unlike most other stable coin projects which allow users to mint/redeem on their own, HYDT only allows specified smart contract to mint/redeem HYDT, and these features are activated only when HYDT exchange rate is outside of peg range.
When the HYDT price is above 1.02 USD, Mint contract is called once per 4 hour, minting HYDT and selling it for BNB on the Pankaceswap BNB/HYDT pair, transferring BNB to the reserve address.
Amount is calculated as follows:
Mint amount = (Current price - 0.9)^2 * Reservebalance * 0.04
When the HYDT price is below 0.98 USD, Redeem contract is called once per 4 hour, buying HYDT with BNB from the reserve address and burning it.
Amount is calculated as follows:
Redeem amount = (1.1 - Current price)^2 * Reservebalance * 0.004
Mint contract and Redeem contract is triggered based on pancake swap BNB/HYDT price.
When Mint and Redeem swap orders cause more than 0.5% slippage on BNB/HYDT pancakeswap pool, these orders are separated into small pieces and executed multiple times to keep slippages minimum.
Mint/ Redeem contract is automatically activated using gelato decentralized backend when HYDT price is outside of peg range.
HYDT price is calcurated by HYDT/BNB pool on pancakeswap.
HYDT is designed to be BNB collateralized stablecoin, which means HYDT supply is controlled by smart contract using predetermined formula to stabilize HYDT price close to 1USD, and BNB collateral will be used to redeem HYDT in case HYDT price falls below redeem price.
While HYDT Protocol offers up to 30% APY on HYDT Staking, users are required to lock the capital for long term, not allowing users to release principal at anytime. This feature will allow BNB collateral price to appreciate not affected by short term price movement, and stabilizing HYDT price by avoiding "bank run" event at the same time, resulting in protocol's sustainable growth without losing HYDT holder's confidence on HYDT price stability.
Under extreme market condition, BNB price may drop significantly which result in HYDT massively undercollateralized. In this case users selling HYDT will share loses but protocol will avoid HYDT become worthless as redemption takes very long time until majority of collateral is consumed.
Learn more about how protocol is designed to be sustainable learned from past failed project, Check this doc
