How Does it Work
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What is a stablecoin:
A stable coin is a new type of crypto currency that is developed to achieve some form of price stability and usually backed by some form of asset. Stable coins attempt to offer the best of crypto and fiat in that it is quick, secure and private coupled with the volatile-free stable valuation of a fiat currency.
There are three usual types of stable coins;
- 1.Fiat-Collateralized Stablecoins (e.g., Tether - USDT);
- 2.Crypto-Collateralized Stablecoins (e.g., MakerDao - DAI);
- 3.Non-Collateralized (algorithmic) Stablecoins (e.g., Ampleforth - AMPL).
What is the TAU Algo Dollar (TAD):
TAD is generated, backed, and kept stable through collateral assets (option 2 detailed above) that are deposited into Rubix Vaults on the Rubix Protocol. A collateral asset is a digital asset that RBX holders have voted to accept into the Protocol.
To generate TAD, the RBX Protocol accepts as collateral TAU and any other Lamden assets that has been approved by RBX holders. RBX holders must also approve specific, corresponding Risk Parameters for each accepted collateral (e.g., more stable assets might get more lenient Risk Parameters, while more risky assets could get stricter Risk Parameters). These and other decisions of RBX holders are made through the Rubix decentralized governance process.
How is TAD created:
TAD is created through smart contracts called Vaults. Each user creates their own Rubix Vault through our platform and generates TAD by leveraging their asset as collateral to generate TAD. The creation of a vault is not a difficult process; however, it is important to note that by generating TAD there is an obligation placed on the user to repay the generated TAD, this includes a stability fee which is paid by all vault owners when debt is paid off or paid down.
1. Create and Collateralize a Vault:
A user creates a Vault via our dashboard by funding it with a specific type and amount of collateral that will be used to generate TAD. Once funded, a Vault is considered collateralized.
2. Generate TAD from the Collateralized Vault:
The Vault owner initiates a transaction, and then confirms it in their Lamden wallet in order to generate a pre-determined amount of TAD in exchange for keeping their collateral locked in the Vault.
3. Pay Down the Debt and the Stability Fee:
To retrieve a portion or all of the collateral, a Vault owner must pay down or completely pay back the TAD they generated, plus the Stability Fee that continuously accrues on the TAD outstanding. The Stability Fee can only be paid in TAD.
4. Withdraw Collateral:
With the TAD now returned and the Stability Fee paid, the Vault owner can withdraw all or some of their collateral back to their wallet. Once all TAD is completely returned and all collateral is retrieved, the Vault remains empty until the owner chooses to make another deposit.
Last modified 1yr ago