AMA Recap : DEBASE
Section 1: The Selective Questions
[I will be referring to the DEBASE team collectively as DEBASE]
Q1) DEBASE has a really unique history, can you tell us what happened to the first iteration, and how it got to where it is today?
DEBASE :
Sure, there is a lot of confusion about this. With some people saying it ‘rugged’, which is impossible since the liquidity is provided by the community. The tokens themselves are fair launch mined, with no pre-mines, which means there are no team tokens.
Uniswap Detective :
Yes, exactly. It’s all community liquidity so a rug is not possible which is still the case.
DEBASE :
What happened was, at some point we suspected there was a bug in code, so we asked the community to remove liquidity, and sell the tokens. We then did an audit, fixed the bug, and then did a token airdrop for V1 users using snapshots they decided on.
The airdrop code was audited, to ensure fairness. then the rest of V2 Debase was distributed by mining again. Degov is completely distributed by mining. On top of this, since there was a lot of speculation that Dev sold off her tokens, she locked her tokens and liquidity, even though she mined it with her own capital that unlocks in Dec 2021
[https://team.finance/view-coin/0x9248c485b0B80f76DA451f167A8db30F33C70907?name=Debase&symbol=DEBASE — link to the locked capital]
Uniswap Detective :
As you know I was invested in V1 myself so I’m well aware of how everything went down and how you brought on Vidarr as a security advisor which was a great move.
Also, the DEV locking their tokens is another great step to show long term commitment.
That’s such a cool story, and I really respect the effort that everyone has put into it in order to revive.
DEBASE :
Some people don’t know this, but she actually used her own capital to minimize losses for V1 users and has made no money despite inventing the protocol. All this information is available to verify on-chain.
Q2) Now let’s move onto the project itself. Can you briefly explain what DEBASE is? Then we’ll get into the details of it and its purpose in the following questions.
DEBASE :
Debaseonomics is a DeFi protocol that aims to create the first truly decentralized, governable algorithmically stable coin through two assets, DEBASE, the elastic monetary token, and DEGOV, the governance token.
We aim to achieve this with @jusTaPunkk’s innovative architecture that allows for open-ended external stabilization through smart contracts called “stabilizer pools” (s-pools). This design can be used to overcome the problems faced by other algorithmic (and non-algorithmic) stablecoins; mainly the lack of being able to peg during target price during negative rebase cycles and AMMs like uniswap setting the price post rebase.
Uniswap Detective :
Ok, simple enough. I’m sure many are aware of other rebase projects such as AMPL but you have added a lot of innovative features which make DEBASE really stand out.
It’s also the only real decentralized rebase project in the space.
Q3) Okay, so we understand that it’s a stable coin. But other stable coins already exist in the market — what makes DEBASE unique? What problem is it setting out to solve?
DEBASE :
Sure, so the need for stable coins is clear as is, to understand what makes Debase different, we need to look at why we need algorithmic stable coins first.
Stablecoins like Tether, USDC are centralized to the point where if they wanted to, they could censor people by blacklisting addresses. USDC has already started to work with US state policy, while USDT can “recover” coins that people lose in smart contracts if you contact admins, which makes both projects susceptible to pressures of censorship (for e.g., of Citizens who are believed to belong to a sanctioned country).
On the other hand there are collateral-based stable coins (like DAI, SUSD). Take DAI: ETH is deposited to power a certain amount of DAI according to a certain collateralization ratio. The issue with these tokens is they are correlated with the market since market crash events would mean collateral is revoked.
So to overcome the above issues, we had algorithmic “stable coins” like Ampleforth that were supposed to be uncorrelated with the market. The problem with AMPL and similar tokens is that, it turns out, just changing token supply based on market activity is not enough to stabilize the coin.
It’s apparent now that you need some form of external stabilization, especially to carry you through your negative rebases cycles where pegging to target price is much more challenging.
One of Debase’s main innovations is the s-pool idea, which basically allows for this external stabilization. And since s-pools stabilize Debase, and s-pools are open ended, you have a powerful governance sitting on top of the protocol to manage which s-pools can get chosen and how to reward them.
Uniswap Detective :
Ok so most table coins are very centralized which doesn’t really fit into the DeFi space.
Then you have tokens such as AMPL which have done well but the simple mechanic of just having an elastic supply is not enough in order to be sustainable long term.
Can you explain what makes pegging a stable coin to something like — say — the US dollar, an issue?
DEBASE :
USD is inflationary, and more over to be backed by USD, you need have it in a bank somewhere. Not possible to be unregulated, since a decentralized entity can’t really interact with a bank. Technically speaking however, Debase is flexible enough to allow for this, it’s just not an ideal solution for decentralized non-inflated stability.
Q4) How exactly does the rebasing work for DEBASE? Will I maintain the value of my coins if the price is going to be falling to $1?
DEBASE :
Think of it like a pie. You buy a piece of it when you get debase. When a rebase happens i give you a bigger or smaller pie. But your pie size is the same size as before.
So if you have 10% of all debase before. Then after a rebase you will still have 10% of all debase. So rebase itself just switches out pies like this
Uniswap Detective :
Ok, so we should be looking more at the market cap rather than the price then to establish our position then right?
Because as you say, you buy a % of the market cap and that % will stay the same after the rebase.
DEBASE :
Yes at this stage, price is only important for calculating rebase, not for any other reason
Q5) There are already other tokens with rebasing mechanics, and they still have difficulty stabilizing the price — can you go into what stabilization pools are, and why they’re important to DEBASE?
DEBASE :
A s-pool is open-ended and has the following two constraints only:
1) It should have a function that informs governance if it is requesting rewards for stabilization of DEBASE or not (and if so, how much)
2) The owner of the stabilizer should be as same as the owner of the Debaseonomics policy contract. Since these pools have to be approved by governance, game theory dictates governance will ensure an additional constraint:
3) It should work to stabilize the price of Debaseonomics and benefit DEBASE holders either by providing buy pressure, removing tokens from the supply, or any other means including but not limited to yield farming, debt mechanisms, arbitrage, collateralization by a protocol/synthetic or digital asset, etc.
The third constraint is because, governance is rewarded for stabilizing rebase. Stabilization of the positive rebases is easy, you can create a pool where people provide their liq. an then inflate supply by rewarding them for it
Uniswap Detective :
Ok, so the s pools have many use cases in order to stabilize the price. For example, they can be used to incentivize/reward the community to hold through negative rebases etc. as well. Is that right?
DEBASE :
Yes, stabilization during negative rebases is harder, you need some capital to support the price. So we are building s-pools that function like yield vaults, built on top of our partners (like 88mph), that take in liq. generate yield on it. The yield is shared with the LPs and the protocol, which uses it to stabilize Debase price by market buying.
[More info on the pools here — https://debaseonomics.medium.com/debase-v88-new-dawn-e6bc213796a3]
Uniswap Detective :
What’s the difference between passive and active s-pools?
DEBASE :
Passive pools can be thought as not thing anything themselves to stabilize debases price. They just work on the assumption that game theory will stabilize debase. Meaning you can set some arbitrary condition that say if we have 20 positive or neutral rebases in a series. Then you will be rewarded by extra debase tokens.
This compared to active pools that actively work to stabilize. So you can think of a stabilize pool that behaves like a yield farming. It pools peoples funds. Uses those funds to farm protocols like mph. Uses profits to buy debase or sell debase at set instances to stabilize the price.
So within these two extreme you can have a broad range of pools. From pools that burn debase to raise price during negative rebases, to options pools that allow people to bet on when debase stabilizes.
Q6) What is DEGOV, and what can it be used for?
DEBASE :
As already mentioned, you have a protocol that is endlessly upgradeable through s-pools. More over the parameters of DEBASE are also changeable. So, you need a powerful governance to actually make the upgradability decisions by both adjusting the parameters and choosing the right s-pools. Since Degov stakers get awarded in Dai for price stability, the incentives are well-aligned.
Actually, this goes back to your earlier question [Okay, so it’s a bit like another step away from reliance on FIAT currencies, yeah?]: At the end of this market cycle, we will see a DeFi reserve emerge. We are trying to be that reserve.
It’s possible for us since we have an architecture where various DeFi interests can sit on governance, drive the utilization of Debase (or a wrapped version of it once it stabilizes) and drive adoption to the currency.
Uniswap Detective :
Ok, am I right in thinking that multiple DeFi protocols (such as MPH) will look to own DEGOV in order to have a say in the governance and use DEBASE as their ideal stable coin?
DEBASE :
Yes, and earn rewards for it by both stabilizing it and driving usage to it. You can read our vision statement here
Q7) What sort of future do you envision for DEBASE? What sort of market-cap is possible if there is widespread adoption of DEBASE as a stable coin?
DEBASE :
It’s hard to talk about this without sounding like giving financial advise, but if Debase is the DeFi reserve, then whatever USDC/USDT aim to be, will be the target.
Uniswap Detective :
Yes that’s fair enough. I think we as a community can do our comparisons to what’s on the market VS your protocol. The potential is limitless really.
DEBASE
Dextools : https://www.dextools.io/app/uniswap/pair-explorer/0xa8e5533d1e22be2df5e9ad9f67dd22a4e7d5b371
Telegram : https://t.me/debaseonomics
Website : https://debaseonomics.io/
Twitter : https://twitter.com/debaseonomics
Medium : https://debaseonomics.medium.com/
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