We are proud to introduce to you the new decentralized algorithmic protocol, BasisCoin.
BasisCoin is an open-source, permisionless, highly- scalable, decentralized, algorithmic protocol built on Ethereum.
This is a protocol inspired by Basis.cash. We found some design flaws in Basis.cash and made improvements. But retain the underlying structure of Basis.cash, because we believe that a structure that has been tested by time and users is stable and safe.
Let us introduce the three redefined tokens:
BCC — BasisCoin Cash
BCC tokens are designed to be used as a medium of exchange. The built-in stability mechanism expands and contracts their supply, maintaining their peg to the MakerDAO Multi-Collateral Dai token (which roughly trades near the United States Dollar).
BCB — BasisCoin Bond
BCB(BasisCoin Bonds) are minted and redeemed to incentivize changes in the BCC(BasisCoin Cash) supply. Bonds are always on sale to BCC holders, although purchases are expected to be made at a price below 1 BCC. At any given time, holders are able to exchange their bonds to BCC tokens in the BasisCoin Treasury. Upon redemption, they are able to convert 1 BCB to 1 BCC, earning them a premium on their previous bond purchases.
The difference with Basis.cash, bonds in BasisCoin do not have expiration dates. However, in order to ensure the health of BCB, we have set the upper limit of the BCB exchange threshold. Each epoch can only exchange 5% of the current total BCC. The total maximum is 35% of the total BCC.
BCS — BasisCoin Share
BCS(BasisCoin Share) loosely represent the value of the BasisCoin network. Increased demand for BCC results in new BCC tokens to be minted and distributed to BCS holders, provided that the Treasury is sufficiently full.
The difference with Basis.cash, holders of BCS(BasisCoin Share)LP tokens can claim a pro-rata share of BCC(BasisCoin Cash) tokensaccumulated to the Boardroom contract.
Because we believe that LP token will enhance the depth of the liquidity pool and make users’ funds more efficient.
Stabilization Mechanism
The BasisCoin protocol is designed to guarantee BCC(BasisCoin Cash) tokens to be exchanged at a value of a single US dollar, with the stabilizer (in-protocol stability mechanism) in charge of matching the supply of BCC to their demand.
Every 8 hours, the time-weighted average of the BCC-DAI exchange rate is read from the Uniswap v2 contract, which is then fed into the BasisCoin protocol to be referenced by its stability mechanism.
The stabilization mechanism is triggered whenever the price of BCC is observed to be above / below (1+ε) DAI, where ε is a parameter that defines the range of price stability for the BCC token. On launch, ε is set to be 0.05.
The difference with Basis.cash,we shorten the cycle of each epoch to once every 8 hours.
Because according to experience, it is more conducive to the stability of BCC to appropriately increase the iteration of the cycle, and we believe that the appropriate time is once every 8 hours.
Expansionary Policy
If the price of BCC is observed to be higher than (1+ε) DAI, the system mints totalSupply *(oraclePrice-1) number of new BCC tokens. The issued BCC is either deposited to the Treasury or the Boardroom, depending on the BCC balance of the Treasury.
If the Treasury has a balance above 1,000 BCC, then it is logical to assume that either all bonds have been already redeemed, or no BCB holder is currently willing to perform a redemption. Either way, this signals that the demand for bond redemption do not exist at this time, and thus the freshly minted BCC is given to the Boardroom contract.
However, if the Treasury has a balance of below 1,000 BCC, then it is assumed that there will be additional demand for bond-to-cash redemption. Therefore, the issued BCC is routed to the Treasury so that BCB holders can exercise redemptions.
Contractionary Policy
At any point in time, BCB(BasisCoin Bond) can be bought from the protocol in exchange for BCC(BasisCoin Cash). Purchase of Bonds are performed at an algorithmically set price. With a BCC oracle price of P DAI, bonds are sold off at a price of P BCC (effective price being P² DAI), promising bond holders a premium when redeemed. Purchased bonds can be converted to BCC, insofar as the preconditions are met and the Treasury is not empty.
Bonds can still be purchased even when BCC trades above 1 DAI (P > 1), however this nets the purchaser a loss when redeemed. For example, when 1 BCC = 1.1 DAI, a Bond is sold for 1.1 BCC. Since all Bonds can only be redeemed for 1 Cash, this yields the purchaser a net loss. Thus, bond purchases are only expected to occur when 1 BCC trades below 1 DAI. Although bond purchases at a BCC price above 1 USD is allowed in the contract, it is disabled in the BasisCoin frontend to avoid user confusion.
Token Distribution
The protocol starts with a BCS(BasisCoin Share) supply of zero, the entire supply minted purely via community distribution.
Initial distribution of BCC(BasisCoin Cash) are done to those that deposit DAI , USDC, ESD, DSD, BAC and BAS to the distribution contract. A total of 60,000 BCC tokens are distributed to depositors, with 10,000 BCC tokens distributed per day. Tokens are assigned equally to each pools, and the amount of coin deposits are limited to 20,000 tokens per account.
Afterwards, a total of 750,000 BCS(BasisCoin Share) are distributed to those that provide liquidity to the BCC-DAI Uniswap v2 pair, where users can deposit BCC and DAI tokens to the distribution contract and earn BCS tokens. Distribution starts with 6250 BCS distributed every day, and the amount of daily seigniorage is reduced to 75% every 30 days (e.g. 4687.5 BCS daily distribution starting from the 31st day).
Further distribution of Basis Shares are given to liquidity providers of the BCS-DAI Uniswap v2 pair. A total of 250,000 BCS are distributed over a period of 1 year, and an equal amount of tokens are distributed per day.
We have increased the pools of BAC and BAS to support basis.cash to gain more value.
Launch Strategy
Both BCS(BasisCoin Share) and BCC(BasisCoin Cash) does not have any pre-allocations to neither the founding team, nor any external investors. Shares are instead distributed to community members that perform actions beneficial to the network.
Fair, open distribution of the entire token supply is advantageous to the protocol’s long-term success, rewarding those with a stake in the network, instead of investors / speculators targeting short-term profits.
Others
We understand that basis is starting to prepare to extract a part of BCC into the vault to maintain price stability. We think this may be effective, but not in the initial stage. We also adopted this mechanism, but the current version does not make it effective. The purpose is to benefit more early supporters.
What is exciting is that we will add dynamic parameters for each rebase. The current parameter will remain 1. Then it can be adjusted according to the opinions of the community, such as making it larger or smaller. This will be decided by community voting.
