Ether Bank is a decentralized bank on Ethereum. It gives out zero-interest loans for Ether holders. The loans are paid out as stablecoins called Ether dollars.
Ether Dollar Benefits People
Ether dollar makes it possible for people to store value in decentralized money that:
- Unlike current fiat money has zero inflation
- Unlike current crypto-assets has no price fall risk in bear market
Ether Dollar Benefits ETH HODLers
Ether dollar makes it possible for ETH hodlers to receive zero interest loans with no due time in order to deal with their expenses without spending their ETH.
Moreover, using ETH to back loans not only increases the demand for but also decreases the supply of ETH and eventually results into a significant boost in price.
Ether Bank as a Lending Platform
Current decentralized loan solutions like SALT, Nexo, or MakerDAO require 2.5% to 22% interest, stability fee, liquidation penalty, etc. Ether Bank however, does not require any kind of interest, fee, or penalty whatsoever. There’s also no due time for paying back the loans in Ether Bank as long as enough collateral has been locked as collateral.
Ether Dollar as a Stablecoin
The loans in Ether Bank are paid in Ether dollars which are crypto-collateralized stablecoins. Ether dollar does not depreciate in accordance with the inflations in the United States. 1 Ether dollar is worth as much as the purchasing power of a US dollar in 2009 which with the start of Bitcoin was the starting point of money decentralization. Since US dollar depreciated by 19% from 2009 to 2019, an Ether dollar is worth 1.19 US dollars in 2019. The main advantages of Ether dollar as compared to other crypto-collateralized stablecoins are presented in the following table:
|Other Crypto-collateralized Stablecoins||Ether dollar|
|Stability||Lose value by US dollar inflations||Maintains a fixed value|
|Cost||Have token based governance||Has an immutable smart contract|
|Have stability fee and liquidation penalty, etc.||Has no fees and penalties whatsoever|
|Simplicity||Have thousands lines of code||Has hundreds lines of code|
|Have extra tokens besides the collateral and stable tokens||Has no extra tokens|
|Reliability||Require higher fee and interest in high demands to benefit the investors||Requires higher collateral in high demands to secure the system|
|Have Higher default risk||Has lower default risk|
Stability Mechanism; Simply Put.
- Ether Bank has a simple strategy for maintaining value. It creates Ether dollars to an extent that the supply is equal to the demand in the market. In other words, new Ether dollars are created when demand is increased and existing Ether dollars are eliminated when demand is decreased.
- Whenever Ether dollar price is higher than the index it is pegged to, it signals that the supply does not suffice the demand at the moment. Consequently, the system has to increase the supply by giving out new loans. Similiarly, when price falls below the index, it is a signal for lower demands, and the system should curb the loaning process.
- Unlike other Cryptoassets, newly created tokens are not awarded. They are rather issued as loans. The tokens are created by paying loans and eliminated by settling them.
- Issuing new tokens by paying loans instead of awarding them enables Ether Bank to maintain the value of Ether dollar by eliminating some of the existing tokens when the demand for them decreases in the market. Elimination is done through settling some of the loans.
|Supply is a function of time||Supply is a function of demand|
|They are created over time and can never be destroyed after being created||They are created when demand for holding them increases and destroyed when demand decreases|
|Newly created tokens are awarded, so there is no way to destroy them after creation||Newly created tokens are paid as loans, so they can easily be destroyed by settlement|
|When demand increases, their market is balanced by the rise of the price||When demand increases, their market is balanced by creation of new tokens|
|When demand decreases, their market is balanced by the fall of the price||When demand decreases, their market is balanced by destruction of previously created tokens|
|Supply is stable just like gold||Price is stable just like money|
- Advantages of Ether Dollar over Other Stablecoins
- Why is Ether dollar the least likley stablecoin to lose the peg?
- Why Ether Bank When We Have MakerDAO?
- Technical Overview
This repository is created as the proof of concept for Ether Dollar to demonstrate how it can be created as the simplest and most reliable kind of money on the Ethereum network.
The source codes in this repository is highly experimental and under heavy development. Do not use it for anything security-critical yet.
All usage is at your own risk!