Interpretation of Stable++: The First Stablecoin Protocol of RGB++ Layer Using CDP Mechanism

In the evaluation of public chain ecosystems, DeFi data is an important indicator. Modern DeFi relies on four key infrastructures: DEX, lending, stablecoins, and oracles. Although these are common in the EVM ecosystem, they are quite scarce in the Bitcoin ecosystem. Many BTCFi and BTC Layer 2 projects have merely built EVM chains and lack innovation.

In contrast, public chains based on the UTXO model, such as CKB and Cardano, are more attractive. The "isomorphic binding" and "Leap no-bridge cross-chain" solutions proposed by RGB++ Layer have garnered much attention. Projects like UTXOSwap, ccBTC, and JoyID wallet also stand out.

For the CKB and RGB++ Layer ecosystem, the stablecoin system is of utmost importance. A robust and reliable stablecoin issuance protocol directly impacts the ecological landscape, and an appropriate circulation environment is also very important. The RGB++ Layer, with its Turing-complete smart contracts and native AA facilities, provides an ideal circulation environment for the BTCFi ecosystem's stablecoin.

The Stable++ protocol allows users to generate RUSD stablecoin using BTC and CKB as collateral. It combines the Stability Pool insurance pool and a bad debt redistribution mechanism to provide a reliable stablecoin minting solution for BTC and CKB holders. With CKB's unique issuance method, Stable++ is expected to build an underdamped system within the RGB++ ecosystem, acting as a buffer during severe market fluctuations.

Stable++ Product Features and Mechanism Design

There are four main types of stablecoins:

1. Pure centralized stablecoin ( like USDT/USDC )
2. Collateralized stablecoins ( such as MakerDAO, Undo )
3. CeDeFi stablecoin ( like USDe )
4. Pure algorithm stablecoin ( such as AMPL )

Stable++ uses the CDP( debt collateral position) model, similar to MakerDAO. Users over-collateralize assets to mint stablecoins, and the price peg relies on "Keeper" arbitraging between the liquidity pools to maintain it.

The main features of Stable++ include:

1. Users can over-collateralize BTC or CKB to borrow RUSD, or use RUSD to redeem collateral.
2. Staking RUSD can earn governance token STB rewards and asset liquidation rights.
3. RUSD supports isomorphic binding and Leap functionality, achieving low-risk cross-chain.
4. The LSD section is set up, and NervosDAO users can stake CKB to exchange for wstCKB.

The key to the CDP stablecoin protocol lies in the reliability of collateral, efficient liquidation mechanisms, and ecological empowerment capabilities.

The Rationality and Efficiency of the Clearing Mechanism

Liquidation is the key to maintaining the normal operation of lending protocols. Stable++ has innovated in its liquidation mechanism, avoiding the problems of traditional liquidation mechanisms. It has added a dual insurance mechanism of "Stability Pool" and "Redistribution."

The Stability Pool allows users to deposit RUSD as a "standing army" to liquidate bad positions. During liquidation, the protocol first settles through the insurance pool, and then distributes the collateral to LPs as rewards. This improves liquidation efficiency without the need to temporarily find liquidators.

If the Stability Pool reserves are insufficient, the Redistribution mechanism will be activated, redistributing the debts and collateral of liquidated positions proportionally among all positions. This is different from the redistribution mechanisms of platforms like Synthetix, as borrowers of Stable++ not only incur additional debts but also receive corresponding benefits.

This dual insurance mechanism ensures that liquidation events can be processed quickly, effectively addressing the bad debt issues of traditional lending protocols. Efficient liquidation also allows Stable++ to adopt a lower collateral rate, such as within 110%, greatly improving capital utilization.

Build an underdamped system within the ecosystem

A healthy economic system requires a "under-damped mechanism" to buffer the trends of coin price fluctuations. Stable++ supports BTC and CKB as collateral, deployed on the RGB++ Layer, and its association with CKB is beneficial to the overall ecosystem.

The issuance of CKB includes "base issuance" through PoW mining and "secondary issuance" by charging storage rent through inflation. Stable++ allows users to stake CKB to generate wstCKB or lend RUSD. When the price of CKB rises, more people will use CKB as collateral to mint RUSD, locking up CKB and increasing on-chain activity. This indirectly reduces the inflation rate of CKB while increasing miner revenue and network economic security.

Stable++ and CKB's issuance mechanism form a relatively healthy token economic system, creating a "under-damped mechanism," rather than simply leveraging. With CKB LST, its composability and liquidity will be further improved.

Summary: The Market Necessity of Stable++

From a market perspective, the BTCfi ecosystem needs a large-scale decentralized stablecoin:

1. Currently, USDT and USDC account for 90% of the market value in the crypto market, but they have high centralization risks. BTCfi users prioritize security, and decentralized stablecoins are a necessary condition to attract large participants.

2. The total market value of stablecoins is approximately $80 billion, which is only a small fraction of Bitcoin's market value. Stablecoins based on BTC still have significant growth potential.

As the RGB++ Layer ecosystem flourishes, and projects like UTXOSwap, Stable++, and JoyID gradually improve, the infrastructure for BTCFi on CKB is taking shape. The stablecoin protocol based on Bitcoin will bring new imaginative possibilities to the BTCFi ecosystem, and CKB is expected to become a fertile ground for entrepreneurs.