$USDr is a soft-pegged USD stablecoin that represents an over-collateralized debt position.
Good to know: $USDr (stablecoin) and $RATIO (SPL governance token) are the 2 tokens associated with the protocol.
$USDr is a Ratio-issued over-collateralized stablecoin soft-pegged to US Dollar. $USDr is backed by a growing basket of crypto assets, starting with a stablecoin-stablecoin Liquidity Pool (LP). $USDr is the first algorithmically risk-adjusted Collateralized Debt Position (CDP). Users can mint $USDr against LP collateral with a collateralization ratio, dynamically adjusted based on the calculated risk of the underlying assets.
Over the long-run, $USDr token economics are guided by a few key forces. These forces influence the supply and demand curve for $USDr.
Forces Influencing Demand
The demand for $USDr tokens on the open market will come from a few sources.
- 1.Desire for stability. DeFi users need to be able to trade into stable assets with ease, which will drive demand for a well-designed, decentralized stablecoin like $USDr. $USDr acts as a proxy for risk assessment on a diversified basket of yield-bearing stable assets. It is a negative interest form of debt because it is backed by assets that gain yield and avoid volatility.
- 2.$USDr repayment. Users mint $USDr against crypto-assets in their Ratio vaults. In order to unlock their assets from the vault, they need to return their $USDr to Ratio. They may have to buy $USDr off the open market to do so.
- 3.Peg Stability Module (to come). $USDr is a stablecoin soft-pegged to the U.S. Dollar. In order for the value of 1 $USDr to stay as close to the value of 1 USD, people need confidence that the exchange rate is consistent and reliable. To evoke that confidence, we are creating a peg stability module. The peg stability module is essentially a direct swap between a user's wallet and Ratio's treasury such that 1 $USDr can always been redeemed for 1 $USDC at any time, and vice versa.
- 4.$USDr-based financial products (to come). Ratio's larger vision is to create risk-adjusted financial products using $USDr. As Ratio makes $USDr-based financial products available to be bought and sold, this will generate additional demand for $USDr.
Forces Influencing Supply
Outside of the normal release of tokens into Ratio's treasury and distributions to its team and investors, there are two sources of supply of $RATIO tokens on the open market.
- 1.Desire for volatility. $USDr is a stablecoin. If the market decides it wants more exposure to volatile assets, it may sell $USDr to buy them.
- 2.$USDr creation. Whenever a user adds collateral to their Ratio vault and mints $USDr, this increases the supply of $USDr.
- 3.Peg Stability Module. Because the peg stability module works both ways - meaning users can swap 1 $USDr for 1 $USDC or 1 $USDC for 1 $USDr - a net positive amount of $USDr could be created.
- 4.$USDr-based financial products (to come). Each $USDr-based financial product that is minted increases the supply of $USDr.
As you can tell, these forces are designed to be largely balanced. This is meant to support the steady and sustainable growth of $USDr over time.