This section provides a high-level overview of the uAD protocol. For a detailed explanation, please read the Tokenomics page.
The cryptocurrency industry is ever-evolving and the landscape has been heavily changing through the past couple of years. Each new innovation presents new problems to solve and it's exciting to watch players battle over long-term growth over short-term price action.
For example, the eternal argument against cryptocurrencies is their instability and volatility. As such, they have become the playground of speculators looking to move investments. Then they make poor stores of long-term value because of the fluctuations. The response to this initial problem is to create currencies like USDT, USDC, and USDT that are centrally controlled and pegged to the United States Dollar.
While this is a solution that has somewhat worked, relying on a centrally controlled currency runs counter to the principles of crypto itself which is being free of intervention -whether fiscal policies or geopolitics, putting itself outside banks, countries, or traditional banking systems.
Then comes along DAI, unlike other centralized stablecoins, it’s Maker (MakerDAO) promised that this stablecoin is completely decentralized. And so it was until it wasn't. Nowadays, it’s chock full of stable coin collateralization and is under fire for “getting in bed” with centralization and forces beyond its control such as new government regulation that could seriously affect its reserves. Events such as wars, natural disasters, Wall Street drama on the collateral currency could pose similar threats.
Without stability, we have nothing.
The advent of DeFi has reimagined financial services that eliminate third parties, are peer-to-peer, and are resistant to censorship. Ubiquity has seen that what is needed for a crypto native long-term store of value: a token that is both stable and independent of centrally controlled currencies. But that's not all. What the industry needs is an adaptable stablecoin that can evolve as needed.
Hence the birthing of the Ubiquity Dollar (uAD) stablecoin, Ubiquity’s flagship product and the first polymorphic stablecoin in decentralized finance. uAD is a sovereign, scalable, and secure digital dollar designed to become the reserve currency of DeFi.
Ubiquity Algorithmic Dollar (uAD) is an epoch-less, elastic supply stablecoin. The protocol is designed to prevent prolonged debt cycles and vastly improves a participant's experience by eliminating epochs and epoch-based mechanisms such as "staging." The foundation of our system design comes from Empty Set Dollar, those familiar with ESD can observe more advanced parallels in the uAD protocol.
The primary benefit of holding and using a stablecoin like uAD is its pegged value - in this case, $1. Naturally, the uAD protocol anticipates inflation cycles (price of uAD goes above $1) and debt cycles (price of uAD goes below $1).
- When the price of uAD rises above $1, new uAD is minted. The newly minted uAD can be redeemed by uDEBT holders and is distributed amongst bonded uAD holders, DEX liquidity providers and the protocol treasury. This supply expansion of uAD is intended to reduce demand for uAD, and so, decrease its price.
- When the price of uAD falls below $1, uAD holders are incentivized to burn their uAD in exchange for uDEBTs. uDEBTs are issued at a premium and can be redeemed 1:1 for uAD when the price rises above $1 again. This supply contraction of uAD is intended to increase demand for uAD, and so, increase its price.
To be clear, there are many competitors in this space (@terra_money, @fraxfinance) aiming towards this goal. The difference is in the design of uAD as a response to the current problems among algorithmic stablecoins.
Most algorithmic stablecoins are built on rigid economic strategies that make it difficult for changes to new threats. Scenarios such as the ever-changing dynamic of the DeFi economy and security breaches can threaten the stability of the algorithmic dollar. Ubiquity designed the uAD stablecoin with a polymorphic architecture that maximizes the flexibility of upgrading stabilization mechanisms. All through a decentralized, transparent, community-driven mechanism.
The ultimate goal is to drive usage and integrate the use of uAD in real-world scenarios starting with integration with traditional software-as-a-service products and ultimately as a payments settlement layer.
If you're interested in learning more, we suggest that you take a look at some of the more in-depth documentation, like the Tokenomics overview and uAD token documentation pages.
For technical details related to each of the smart contracts the protocol is comprised of, see the Ubiquity Smart Contracts page, which contains brief descriptions for each contract and a link directly to the Solidity code on our Github.
If you have any questions, feel free to drop by our Discord server!