fUSD Implementation PART 2 (StakeSteak Revamp)

We have touched the end. On 8/28, fUSD reached $1

For the launch of the fUSD market on SCREAM, we set a supply cap of 2.5 mil fUSD to mitigate risk of a new market being introduced to the original six.

This article will detail phase 2 of rolling out the fUSD peg and maintaining the peg.

  1. Introducing SCREAM incentives to fUSD market.

In order to encourage the borrowing of fUSD, lenders and borrowers will be able to receive SCREAM tokens as rewards on 9/3 at 1:30 AM UTC. 1/36 of the daily 1151 SCREAM will be allocated to the fUSD market initially(~32 SCREAM per day).

2. Increasing fUSD Supply Cap

As borrowing of fUSD increases due to incentives, we will increase the supply cap to meet demand of borrowing. This supply cap increase will also make borrowing more profitable, encouraging people to borrow out more fUSD. Theoretically, this cycle can continue until there is no need for a supply cap. However, we will be cautious and make changes to supply cap slowly. The first supply cap increase will be 2.5 mil fUSD, which will happen AT LEAST 24 hours after fUSD incentives start. A finalized time will be posted in the SCREAM and STEAK discord.

3. StakeSteak Revamp: Stableswap

The final step is creating liquidity for fUSD in a stableswap, so that users can trade their fUSD for other stablecoins along a more tolerant curve, which reduces price impact. This will help SCREAM stay solvent in black-swan scenarios where fUSD deviates from its fair value. As of now, fUSD theoretically has a fair value of $1 given all debt is sufficiently over-collateralized. Once liquidations are released, we expect fUSD to hold peg at $1, and the pool should adjust to reflect this.

However, a stableswap that is willing to support fUSD need to come first. Thus, StakeSteak will now become a Stableswap(starting with fUSD of course). Given Curve’s Intellectual Property Rights, StakeSteak will not be able to use the same algorithm, but instead are using Andre Cronje’s implementation given here.

Blue Line = Uniswap, Green Line = Curve, Orange Line = StakeSteak

The above image depicts the different slippages used by different swaps. The curve StakeSteak will be using for it’s stablecoins has much better rates than xy = k, and the curve is almost as flat as Curve’s line. The more flat the line, the less slippage a user will have to pay when pools are imbalanced.

An active stable swap is crucial for the growth of Fantom, allowing for different stablecoins to emerge, creating Forex markets, helping stabilize certain tokens, etc.. StakeSteak plans on filling this role by providing an engaging and continuously evolving stableswap for Fantom. Disclaimer: The StableSwap contract is currently, so please use at your own risk.

For this transition to happen, we’re going to have to discontinue some things. STEAK-iFUSD, USDC-iFUSD, FTM-iFUSD, and TOMB-iFUSD will no longer be incentivized. Instead, we will be focusing most of our incentives towards the stableswap (USDC-fUSD pair) at launch. iFUSD will continue to exist and earn fees from the stableswap, and SCREAM-FTM will continue to be hosted on SteakHouseV2. These changes are planned to take place on 9/4 at 11:00–11:30 PM UTC time.

On a last note, StakeSteak’s UI is receiving a makeover for these changes, so get excited for a new look of STEAK!

Financial Suite of Products focused on fUSD