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Decentralized Finance: A Paradigm Shift

Decentralized Finance, or DeFi, represents a revolutionary approach to financial services that aims to address the longstanding issues plaguing traditional banking and centralized finance systems. These legacy systems have often been marred by corruption, inefficiency, and a lack of transparency, leading to incidents like the collapses of MtGox, FTX, Celsius, and BlockFi.

At its core, DeFi seeks to recreate and enhance traditional financial functions using blockchain technology, with a fundamental principle: users should have full control over their assets through ownership of private keys. This ethos is encapsulated in the phrase, “Not your keys, not your crypto.”

The Power of Mathematical Regulation

DeFi introduces the concept of “regulation through mathematics.” Unlike traditional financial systems where rules can be bent or broken by those in power, DeFi protocols operate on immutable smart contracts. These contracts execute precisely as programmed, regardless of external pressures. In essence, 2+2 will always equal 4 in a DeFi system, providing a level of certainty and fairness that traditional finance often struggles to achieve.

TheStandard Protocol: Empowering Users in DeFi

TheStandard Protocol stands at the forefront of this financial revolution, focusing on three critical aspects of finance that traditionally required centralized authorities:

1. Borrowing and Collateral Management: Users can borrow against their own assets without relying on a centralized entity to hold their collateral.
2. Yield Generation through Market Making: The protocol enables users to become market makers and earn yields on their assets, with automatic compounding features.
3. Collateral Trading: Users can trade their collateral directly on decentralized exchanges (DEXs) without intermediaries.

What sets TheStandard apart is its ability to seamlessly integrate these functions into a decentralized, user-controlled environment. Every action – from borrowing to yield generation to trading – requires the user’s explicit authorization through their private key signature. This approach eliminates the need for third-party trust and places control firmly in the hands of the users.

The Significance of TheStandard’s Approach

By developing these financial capabilities on-chain without the need for centralized authorities, TheStandard Protocol is advancing the core mission of DeFi. It’s creating a financial ecosystem where:

• Users have full custody and control of their assets at all times.
• Financial operations are transparent and verifiable on the blockchain.
• Smart contracts, rather than corruptible entities, govern the rules of engagement.
• The risk of centralized points of failure is significantly reduced.

In essence, TheStandard is not just participating in the DeFi movement; it’s actively shaping a future where financial services are more accessible, transparent, and user-centric. By empowering individuals to manage their finances without relying on traditional banking infrastructure, TheStandard is contributing to a more inclusive and resilient global financial system.

As DeFi continues to evolve, protocols like TheStandard will play a crucial role in demonstrating the viability and advantages of decentralized financial services, potentially catalyzing broader adoption and reshaping the landscape of global finance.

Collateral Types

The Standard supports a variety of collateral types, including:

• Wrapped Bitcoin (WBTC)
• Ethereum (ETH)
• Wrapped Ethereum (WETH)
• Arbitrum (ARB)
• Chainlink (LINK)
• PAX Gold (PAXG)
• GMX (GMX)
• Radiant (RDNT)
• SushiSwap (SUSHI)

The collateralization ratio is always set at 110%, as Smart Vaults take into consideration all assets in a single smart vault collectively. Users can deposit a mix of different assets, and the vault evaluates the value as a whole, ensuring optimal collateral efficiency.

Introducing TheStandard’s Auto Debt Discount Technology, StableCore

TheStandard introduces StableCore Auto-redemption, an innovative feature that automatically reduces users’ debt when USDs trades below $1. Using Chainlink Automation, the system monitors prices 24/7 and executes redemptions that benefit both borrowers and protocol stability. Larger vaults get priority access to these savings opportunities, where users can save money on debt repayment while helping maintain USDs price stability. Combined with zero-interest borrowing and yield generation, this makes TheStandard’s Smart Vaults one of DeFi’s most capital-efficient borrowing solutions.

TST DAO

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StableCore Auto-Redemption: Your Smart Vault Just Got Smarter

In the ever-evolving world of DeFi, stablecoins power everything from yield farming to zero-interest borrowing. Yet even the most robust stablecoins can occasionally drift from their target price. Today, we’re excited to introduce StableCore Auto-redemption – a feature that not only maintains USDs stability but turns price dips into savings opportunities for our users.

Turning Market Movements into User Benefits

Imagine you’re shopping at your favorite store and notice everything is suddenly 5% off. You’d probably take advantage of that discount, right? That’s exactly what StableCore does for your Smart Vault debt, but entirely automatically. When USDs trades below its target price of $1, your vault springs into action, using a portion of your collateral to capture this discount and reduce your debt.

Let’s see how this works in practice through Alice’s story:

Alice maintains a Smart Vault with 500,000 USDs borrowed, backed by $1,000,000 in ETH and WBTC collateral. During a market swing, USDs dips to $0.95. StableCore’s automation kicks in, calculating that it needs 100,000 USDs worth of buy pressure to help restore the peg. The protocol purchases these USDs at $0.95 each, spending just $95,000 of Alice’s collateral to pay off $100,000 of her debt. The result? Alice saves $5,000 instantly, keeps more of her collateral, and still has 400,000 USDs in outstanding debt – all while helping stabilize USDs price. Everyone wins.

The Power of Priority

One of StableCore’s most innovative aspects is its priority system. We’ve implemented a “largest-first” approach that gives bigger vaults priority access to these savings opportunities. Why? Because when larger vaults participate in auto-redemption, they have a more significant impact on stabilizing USDs price, benefiting everyone in the ecosystem.

Think of it like a loyalty program that actually makes sense: the more you borrow, the better your position in line when these savings opportunities appear. A vault with 100,000 USDs in debt could save $5,000 when USDs trades at $0.95, while maintaining priority access to these opportunities over smaller vaults.

Behind the Scenes: Chainlink Automation at Work

At the heart of StableCore’s reliability lies our integration with Chainlink Automation. This sophisticated system never sleeps, constantly monitoring USDs price feeds and triggering the auto-redemption process precisely when conditions are right. Here’s the sequence:

1. USDs trades below $1
2. Chainlink monitors the price and initiates auto-redemption if it stays under $1 for a set duration
3. StableCore identifies eligible vaults, prioritizing larger debt positions
4. The protocol executes the redemption, buying discounted USDs to repay debt
5. Buy pressure helps restore the peg while vault owners save money

Every step happens automatically and transparently on-chain, requiring no user intervention.

A Feature That Works While You Sleep

The beauty of StableCore is its hands-free operation. Your collateral remains safely in your vault until an opportunity arises, and you can monitor all savings through an intuitive interface. Whether you’re holding ETH looking for passive returns, a WBTC enthusiast seeking leverage, or a DeFi user exploring yield strategies, StableCore works tirelessly to find savings opportunities.

Plus, you continue enjoying all the benefits that make TheStandard unique:

• Zero-interest borrowing
• Yield generation on collateral through supported Liquidity Pools
• Complete collateral flexibility
• Automatic debt reduction opportunities

Join the Future of Smart Debt Management

StableCore represents more than just an upgrade – it’s a fundamental shift in how protocols can align stability mechanisms with user benefits. No more choosing between protocol health and user advantage; StableCore delivers both.

Ready to let your Smart Vault work smarter for you? Whether you’re opening a new vault or expanding an existing one, StableCore’s auto-redemption feature stands ready to help reduce your debt costs automatically. The larger your vault, the better your chances of capturing these automatic savings.

Remember, in DeFi, innovation never sleeps – and now, neither does your Smart Vault’s ability to save you money. Welcome to the future of automated debt management with TheStandard’s StableCore.

TST Contract on Arbitrum:
_{0xf5A27E55C748bCDdBfeA5477CB9Ae924f0f7fd2e}

‍USDs Contract on Arbitrum:
‍_{0x2Ea0bE86990E8Dac0D09e4316Bb92086F304622d}

In decentralized finance (DeFi), the way protocols handle stability during market fluctuations can make or break user trust. The Standard introduces a revolutionary solution with its self-redeeming smart vaults, addressing critical issues found in traditional redemption mechanisms like those of Liquity. By shifting the benefits of redemptions from strangers to borrowers, The Standard sets a new benchmark for fairness, stability, and user incentives.

How Liquity Redemptions Work

Liquity’s redemption mechanism aims to maintain the peg of its stablecoin, LUSD, at $1. Here’s how it operates step-by-step:

1. Stablecoin Redemption: LUSD holders can redeem their stablecoins directly for ETH at the $1 peg.
2. Targeting Risky Borrowers: The protocol identifies the most undercollateralized vaults (Troves) and uses their collateral to fulfill the redemption.
3. Arbitrage Incentives: If LUSD trades below $1, arbitrageurs buy discounted LUSD, redeem it for ETH at face value, and pocket the difference.
4. Outcome: Borrowers lose their collateral without any compensation or benefits, while random redeemers profit from the discount.

The Problem with Liquity’s Redemptions

Liquity’s system creates bad game-theoretical incentives:

• Strangers Benefit: Arbitrageurs profit from discounted LUSD, not the borrowers whose collateral is used to fulfill redemptions.
• Encourages DPEGs: Opportunists may intentionally short LUSD or exploit the system to cause a DPEG, knowing they can profit from redemptions.
• Borrower Disadvantage: Borrowers bear the brunt of the mechanism, losing collateral without any added value.

While Liquity’s approach stabilizes the LUSD peg, it sacrifices borrower experience and fairness, creating misaligned incentives in the ecosystem.

How The Standard’s Self-Redeeming Smart Vaults Work

The Standard’s smart vaults solve these issues by making redemptions automatic, borrower-focused, and trustless. Here’s how it works:

1. Trigger for Self-Redemption:
   • If The Standard’s stablecoin (e.g., USDs) trades below its $1 peg, the system activates the self-redeeming mechanism.
2. Debt Reduction:
   • The smart vaults use the collateral locked by borrowers to buy up discounted USDs on the open market.
   • These discounted USDs are then burned to reduce the borrower’s debt.
3. Borrower Benefits:
   • Borrowers with the most leveraged (risky) positions see their debt repaid automatically at a discount, reducing their risk and exposure.
   • No collateral is liquidated outright, and borrowers retain ownership of their vaults.
4. Peg Restoration:
   • By reducing the circulating supply of USDs, the protocol helps restore its peg organically without harsh liquidations or outsider interventions.

Why The Standard’s Redemptions Are Superior

1. Borrower-Centric Incentives:
   • Borrowers, not random redeemers, benefit directly from discounted stablecoins. This aligns incentives and encourages borrowers to stay engaged with the protocol.
2. Eliminates Arbitrage Exploitation:
   • Unlike Liquity, The Standard doesn’t allow opportunistic actors to profit at the expense of borrowers. The system automatically ensures that the value created during a DPEG benefits the protocol’s users.
3. Automatic and Trustless:
   • The redemption process is powered by Chainlink automation, ensuring fairness and efficiency without manual intervention. Borrowers don’t need to monitor or manage their positions actively to benefit.
4. No Forced Liquidations:
   • Borrowers retain their collateral, avoiding the financial and psychological stress of forced liquidation events common in other protocols.
5. Market Stability:
   • By allowing borrowers to reduce their debt during a DPEG, The Standard ensures that its stablecoins remain stable while maintaining user trust and satisfaction.

The Game-Theoretical Advantage

The Standard’s approach eliminates the bad incentives that plague Liquity:

• There’s no motivation for actors to intentionally cause a DPEG since no external party can profit from redemptions.
• Borrowers benefit directly, creating a fairer system where stability doesn’t come at their expense.
• The protocol achieves the same goal of maintaining the peg while fostering positive user behavior and long-term engagement.

Conclusion

The Standard’s self-redeeming smart vaults represent a monumental leap forward in DeFi stability mechanisms. By using automated, borrower-centric redemptions, The Standard addresses the flaws of systems like Liquity, creating a fairer, more sustainable ecosystem.

As DeFi continues to grow, protocols must prioritize user experience and aligned incentives, and The Standard leads the way in making stability work for everyone.

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