[RFP]: SORA Kensetsu (建設)

[shibarimoto]

Proposal Due Date

August 2023

Proposal Overview

SORA Kensetsu (建設) (similar to Maker DAO)

Phase 1

Lock up tokens that are over-collateralized in individual vaults with stability fees, similar to Maker DAO. When the value of collateral in a vault < value of KUSD (SORA Kensetsu USD) debt from the vault, the vault will be liquidated on Polkaswap to buy back and burn KUSD.

A stability fee is charged daily from all vaults and those funds are put into a technical account that is used to buy back and burn KUSD if KUSD goes under $1. XOR token holders govern the system by voting on extrinsics on-chain.

To encourage XOR-KUSD liquidity, a percent of the stability fees collected would go to LPs that stake their XOR-KUSD liquidity on Demeter farm.

Extrinsics (should be voted on by governance):
AddVaultType
Inputs:

• collateral asset id: id of the asset to add as a collateral
• debt limit: upper limit of amount of KUSD that can be in circulation at any time, minted using this collateral
• collateralization ratio: amount of collateralization in percent needed to mint KUSD (e.g., 200% would mean only 1 KUSD would be minted for every 2 KUSD worth of collateral locked up in the vault)
• stability fee: % per year charged pro rata for keeping a vault active (e.g., 365% would mean 1% of the collateral would be taken out per day from the vault)
• liquidity incentive percent: % of the stability fee that goes to Demeter farm to reward XOR-KUSD LPs (e.g., 50% would mean half of the collected stability fee from vaults of this collateral type would go to Demeter farm to reward XOR-KUSD LPs)

SetDebtLimit
Inputs:

• collateral asset id: id of the asset to add as a collateral
• debt limit: upper limit of amount of KUSD that can be in circulation at any time, minted using this collateral

SetCollateralStabilityFee
Inputs:

• collateral asset id: id of the asset to add as a collateral
• stability fee: sets a new stability fee for vaults with the collateral used

SetLiquidityIncentivePercent
Inputs:

• collateral asset id: id of the asset to add as a collateral
• liquidity incentive percent: % of the stability fee that goes to Demeter farm to reward XOR-KUSD LPs

RemoveVaultType
Inputs:

• collateral asset id: id of the asset to remove as a collateral; existing vaults will not disappear, but new vaults won’t be able to be created with this collateral

Extrinsics (can we executed by anyone):
Create Vault
Inputs:

• vault type: id of the vault type (collateral id + collateralization ration + stability fee)
• deposit amount: amount of collateral to deposit to mint KUSD

Add Collateral
Inputs:

• vault type: id of the vault type (collateral id + collateralization ration + stability fee)
• deposit amount: amount of collateral to deposit to increase the collateral; this will just deposit collateral and not mint KUSD

Destroy Vault
Inputs:

• vault id: id of the user's vault to redeem (people can only redeem their own vaults and it has to be all or nothing)
• KUSD: amount of KUSD needed to destroy the vault and return their collateral, destroying the vault; this KUSD is burned

Phase 2

Allow swaps to and from approved stablecoins similar to the Peg Stability Module in Maker DAO.

Proposal Goals

We should have over-collateralized stablecoins that lock up XOR, VAL, PSWAP, XST, XSTUSD, and TBCD. This will reduce the circulating XOR supply and help boost confidence in the SORA economy, while providing very convenient stablecoins for people to use in their dApps.

Builders can also lock up their TBCD to mint KUSD instead of XOR, so it will help reduce the increase in the XOR token supply.

Scope of Work

Phase 1 should be the first release.

Phase 2 should be in the future.

Current Roadblocks and Barriers to Success

I tried to define all the extrinsics and functions needed, but perhaps there is something that was missed.

Evaluation Metrics and Criteria

Implement and launch Phase 1 so we can use it!

Submission Requirements

That we can use Phase 1 features to mint KUSD from collateral.

Submission Method

Blockchain: Mainnet

Project Due Date

No response

Budget Amount

No response

[WRRicht3r]

Available as development milestone 15

[takemiyamakoto]

After reviewing the RFP again, I think it makes sense to split the vault types into two types that have slightly different properties:

Type 1: Pays stability fee in the underlying collateral into a central stability pool, at a % determined by the Type 1 stability fee. Type 1 vaults only need to return the initially minted stable coins to get the remaining collateral that hasn't been paid in stability fees. Type 1 vaults cannot be liquidated.

Type 2: Pays stability fees at the time of redeeming minted stable coins + % of extra stable coins determined by the Type 2 stability fee. Type 2 vaults can be liquidated if collateralization ratio goes too low.