This document was created originally for those deeply familiar with the Empty Set Dollar stabilization mechanics.
Add comparisons to other more modern algorithmic stablecoin systems.
Algorithmic stablecoin protocols like Empty Set Dollar (ESD) are implemented as step functions. They make large state-changing corrections at the beginning of each epoch.
Protocol participants who would otherwise read and act on market signals at different times are constrained to act collectively at each breakpoint. As a result, the system adapts to market signals in shocks and is susceptible to mass entries and exits.
The uAD protocol is designed to create a smooth and continuous flow of information to and from the market, and capital in and out of the protocol.
The uAD protocol is not subject to the epoch system in the traditional sense. Instead, our protocol considers the flip of 1.00 time-weighted average price to be an "epoch".
uDEBTs (coupons representing the system's debt) are natively tokenized as part of an ERC-1155 NFT collection. uDEBT NFTs are individuated by the block number at which they shall expire. This creates an expiry clock for coupons that doesn't depend on epochs.
Moreover, such tokenization of uDEBTs allows for better evaluation of expiry risk of coupons and acts as a foundation for secondary uDEBT markets where speculators can sell their uDEBT tokens if they require liquidity before the price returns to above $1.00.
The Ubiquity ecosystem is designed with multiple products in mind. The design philosophy behind this is that each product should be able to operate on its own. However, it will also be able to benefit from synergies with other products (the ecosystem being greater than the sum of its parts.)
The UBQ token, general governance system, and protocol treasury are the three primary modules shared across products. Read more about them in the Ubiquity Ecosystem section.