TiTi & Stablcecoin series I : History & Problem
Hello to all DeFi community members, I am going to introduce you a totally new stable coin design paradigm, TiTi Protocol.
TiUSD, is an elastic algorithm stablecoin backed by Multi-Assets Reserves and based on M-AMM.
Let me start by presenting a brief history of stablecoin in blockchain world in time order.
The earliest stablecoin is USDT, issued by a company called Tether. In my opinion, USDT is semi-decentralized stablecoin.
Later on, the first generation of crypto native stablecoin is DAI，issued by MAKERDAO. DAI has the largest value in DeFi world as a native stablecoin.
In the first half of 2020, multiple elastic supply algorithm stablecoin surged up. All these stablecoin are very creative, however their market performance and stability are not as expected.
The past few months has witnessed some others stablecoins innovation, Fei, Float, Reflexer, etc.
TiUSD, is none of the above. TiUSD is a new paradigm of stablecoin, an elastic supply stablecoin with multi asset reserve, and built on M-AMM.
Why Stablecoin ?
1 The stablecoins as whole, has a market value of over 100 billion nowadays, and the proportion of crypto native decentralized stablecoins is rather low. Although the demand for them is high, the market needs is far from being met.
2 Many innovative projects happened in stablecoin track. We have seen that many projects in the past have with high TVL. Our team is deeply involved in stablecoin track and believed that this track has great potential.
3 According to our forecast, the market cap will grow exponentially in three years, to 200 billion. Hence,there will be a room for 100 billion. TiUSD, as a new native algorithm stablecoin, will be able to fill the gap.
With the above picture, I would like to talk about Existing Problems and how TiUSD will be the solution. TiTi is following the Trend and solving problems that Fei and DAI cannot.
We just talked about the market potential and history of stablecoin. Now let’s review the problems. That’s why we design TiUSD, because TiUSD is trying to solve all the problems.
In Lane one, all these types of stablecoin are fiat custodial stablecoin by centralized company or institute. Risks exist that the centralized authority issuing fiat-collateralized stablecoins is not fully collateralizing them. The reserves are a black box in between solvency audits. Fiat-collateralized stablecoins are also subject to regulatory risk. This can take the form of blacklisting accounts, mandatory KYC, or others. This poses a potential risk to platforms that integrate with them.
In Lane two, we saw over-collateralization type of stablecoin, DAI, LUSD, and sUSD. However, their capital inefficiency that results from the need to have a sufficient buffer to protect against price volatility in the collateral. All supply requires an excess of collateral for solvency, which limits the growth of decentralized stablecoins. DAI even has a debt ceiling of 66.7% which cannot be exceeded.
In Lane three, we can see what been called the unreserved elastic supply algorithm stablecoins, including Ampl, Basis, ESD. These projects have achieved good exposure due to the Ponzi structure in the short term last year, but in fact, the results are not very good. We believe that the core problem is that there are no reserve at all, so it is difficult to maintain a stable consensus merely based on the trust of users in the algorithm. Moreover, such projects often have very complex mechanisms, high user cognitive costs, and poor use in the whole DeFi ecosystem.
In lane four, the most promising stablecoin and innovation stablecoin are stablecoin with reserves. We deem that the current hot spot for the stablecoins has reached to stablecoin with reserves, like a real central bank. The track we chose, an algorithmic stablecoin that combines a reserve mechanism and an elastic supply mechanism. e.g. FEI, FRAX, FLOAT, etc. These stablecoins have achieved good attention and their respective circulation in a short period of time is impressive. We have to admit that there are crucial problems. For instance, FEI has fallen into an embarrassing situation due to some problems in the startup method and its function-less reweight mechainism, let alone single asset risk. but it has proposed PCV. These thoughts are very forward-looking. In our understanding, PCV is actually a kind of Protocol reserve, and the Protocol can use this part of the fund to adjust the stablecoin price.
After analyzing the competing products on this track, we found that they all have a common problem, that is, they are not good enough in solving the impact of the fluctuation of reserve assets on the stability of the system. Hence, we proposed the TiTi Protocol. Compared with some of the projects just mentioned, it has several advantages. More open and transparent, higher capital utilization and stable efficiency, and stronger ability to resist market volatility risks.TiUSD is able to solve what DAI, Fei, and others can not do .
I will talk in details in TiTi & Stablcecoin series II- TiTi &Stablecoin: Solution & Innovation by TiTi
