01. Protocol Overview - ubiquity/ubiquity-dollar GitHub Wiki

This section provides a high-level overview of the uAD protocol. For a detailed explanation, please read the Tokenomics page.

Vision

The ultimate goal of Ubiquity DAO is to drive mass adoption of the Ubiquity Dollar. This is accomplished through integrations which allow the Ubiquity Dollar to be used in real-world scenarios. The starting point for this adoption is to focus on solidifying ourselves as the premier stablecoin of crypto gaming & the metaverse.

While crypto gaming is a high growth sector, stablecoins are severally underrepresented in the space. We plan to tackle this problem by serving these communities directly and providing specialized support to GameFi projects, such as helping design bespoke tokenomics solutions, offering Ubiquity Credit incentives to projects that implement the Ubiquity Dollar, and sharing proprietary resources such as the Ubiquity Lootbox.

Without stability, we have nothing.

This belief led to the creation of the Ubiquity Dollar (uAD), Ubiquity’s flagship product and the first polymorphic stablecoin in decentralized finance. uAD is a sovereign, scalable, and secure digital dollar designed to become the reserve currency of DeFi.

What is uAD?

Ubiquity Algorithmic Dollar (uAD) is a fully collateralized stablecoin that is built with modularity in mind; the Ubiquity Dollar is easy to upgrade with built in transfer hooks and upgradeable contracts. The team has spent years researching the pitfalls of other stablecoins such as Empty Set Dollar to create a stablecoin that is made with stability, upgradeability, and scalability in mind.

The primary benefit of holding and using a stablecoin like uAD is its pegged value - in this case, $1. Naturally, the uAD protocol anticipates inflation cycles (price of uAD goes above $1) and debt cycles (price of uAD goes below $1).

When the price of uAD rises above $1, new uAD is minted. The newly minted uAD can be redeemed by uCR and uCR NFT holders and is distributed amongst bonded uAD holders, DEX liquidity providers and the protocol treasury. This supply expansion of uAD is intended to reduce demand for uAD in order to decrease its price back down to $1.

When the price of uAD falls below $1, uAD holders are incentivized to burn their uAD in exchange for Ubiquity Credits (uCR). uCR is issued at a premium and can be redeemed 1:1 for uAD when the price rises above $1 again. This supply contraction of uAD is intended to increase demand for uAD which would increase its price.

There are many competitors in this space (@fraxfinance, @MakerDAO) aiming towards this goal. The difference is in the design of uAD as a response to the current problems decentralized stablecoins are currently facing.

Many decentralized stablecoins are built on rigid economic strategies that make it difficult to respond to adverse situations. Scenarios such as the changing dynamic of the DeFi ecosystem and security breaches can threaten the stability of the algorithmic dollar. The Ubiquity Dollar is designed with a polymorphic architecture that maximizes the flexibility of upgrading stabilization mechanisms through a decentralized, transparent, community-driven mechanism. This allows the platform to accommodate the needs of a diverse range of users and applications.

Value Proposition

The uAD protocol is designed to create a smooth and continuous flow of information to and from the market and capital in and out of the protocol. One interesting technology that uAD uses is transfer hooks. Transfer hooks give Ubiquity the ability to monitor and inject arbitrary logic within a transaction. This gives us granular control over the flow of uAD that goes out into the markets and allows us to react accordingly when there is an unforeseen situation with uAD. For example, if a whale looks to dump a large amount of uAD in one transaction to push down the peg, we can actually redirect liquidity to offset the sale and keep uAD at a healthy price.

uCR NFT - Debt Coupons

uCR NFTs (coupons representing the system's debt) are natively tokenized as part of an ERC-1155 NFT collection. uCR NFTs are individuated by the block number at which they shall expire. This creates an expiry clock for coupons that doesn't depend on epochs.

Moreover, such tokenization of uCR NFTs allows for better evaluation of expiry risk of coupons and acts as a foundation for secondary uCR NFT markets where speculators can sell their uCR NFTs tokens if they require liquidity before the price returns to above $1.00.

Multi-Purpose Tokens and Modules

The Ubiquity ecosystem is designed with multiple products in mind. The design philosophy behind this is that each product should be able to operate on its own. However, it will also be able to benefit from synergies with other products (the ecosystem being greater than the sum of its parts).

The UBQ token, general governance system, and protocol treasury are the three primary modules shared across products. Read more about them in the Tokenomics section.

What Makes Us Different

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We also recommend that you check out our other documentation, like the Tokenomics overview and uAD token documentation pages.

For technical details related to each of the smart contracts the protocol is comprised of, see the Ubiquity Smart Contracts page, which contains brief descriptions for each contract and a link directly to the Solidity code.

If you have any questions, or if you are a gaming organization who would like to partner with us, feel free to drop by our Discord server!