DexyGold
An innovative seigniorage-based stablecoin that leverages oracle price feeds to maintain a peg to USD/XAU (gold) price. DexyGold is the first implementation of the Dexy protocol, currently in beta on the Ergo blockchain.
What is DexyGold?
DexyGold is the first implementation of the Dexy protocol, a seigniorage-based stablecoin that maintains a peg to the USD/XAU (gold) price using a XAU/ERG v2 oracle pool. Unlike traditional stablecoins, Dexy uses an algorithmic central bank approach with explicit intervention mechanisms.
Seigniorage-Based
Dexy uses seigniorage and oracle price feeds to maintain its peg, with an algorithmic central bank performing interventions when needed to stabilize the price.
- Oracle-driven price feeds
- Algorithmic central bank
- Explicit intervention mechanisms
Gold-Pegged
DexyGold maintains a peg to the USD/XAU (gold) price using a XAU/ERG v2 oracle pool, providing stability through precious metal backing.
- USD/XAU price peg
- XAU/ERG v2 oracle pool
- Precious metal backing
Overcollateralization
Unlike Terra's original MM algorithm, Dexy incorporates overcollateralization to prevent death spiral scenarios and ensure system stability.
- Prevents death spiral
- Visible collateral in protocol
- Transparent collateral levels
Advanced Mechanisms
Features arbitrage mechanisms, top-up swaps, and anti-draining measures to maintain price stability and prevent system exploitation.
- Arbitrage mechanisms
- Top-up swaps
- Anti-draining measures
Design Overview
Emission Contract
Allows one-way minting of new Dexy tokens by selling ERG at the oracle pool rate. Reverse swaps (selling Dexy for ERG) are not possible through this contract.
Liquidity Pool
Facilitates buying and selling of Dexy tokens using ERG. Utilizes Uniswap V2 logic with modifications based on the oracle pool rate.
Arbitrage Mechanism
When the oracle rate is higher than the LP rate, arbitrageurs can mint Dexy from the emission contract and sell to the LP for a profit, helping push the price towards the peg.
Top-up Swaps
When the oracle rate is lower than the LP rate, ERG from the emission contract can be used to buy Dexy from the LP, pushing the price back up.
Beta Testing
DexyGold is currently in beta testing phase with the following components available:
LP UI
Liquidity pool interface for trading
Bank UI
Central bank interface for minting
Testnet
Testnet Nautilus wallet required
Potential Vulnerabilities
Draining Attack
Alternating between profitable minting/selling and topping up the LP could potentially drain the emission contract's ERG. Anti-draining measures help mitigate this risk.
Oracle Manipulation
The design relies on accurate oracle price feeds. Safeguards against oracle attacks and manipulations should be considered.
Demand Shifts
Significant drops in demand for Dexy could lead to persistent selling pressure. The stabilizing mechanisms may need to be robust enough to handle such scenarios.
Modeling Requirements
Thorough modeling of economic incentives, game theory, and attack scenarios would provide valuable insights into the system's stability and resilience.
Terra Comparison
There have been discussions comparing Dexy to the original Terra MM (Market Module) algorithm. However, Dexy incorporates overcollateralization, which helps prevent the "death spiral" scenario that affected Terra.
Terra's Issues
- Infinite inflation of base currency
- Death spiral scenarios
- No overcollateralization
Dexy's Solutions
- Explicit overcollateralization
- Transparent collateral visibility
- Prevents death spiral
Common Questions
How does DexyGold maintain its peg?
DexyGold uses an algorithmic central bank approach with explicit intervention mechanisms. When the price deviates from the oracle rate, the central bank intervenes by injecting ERG reserves or performing other stabilization actions.
What makes it different from Terra?
Unlike Terra's original MM algorithm, Dexy incorporates overcollateralization to prevent death spiral scenarios. The collateral is explicitly visible in the protocol-owned liquidity, and the system uses transparent collateral levels rather than dynamic supply illusions.
What are the collateral levels?
Collateral levels in Dexy may vary over time. If the system performs well and mint/LP fees accumulate, the collateral ratio could exceed 400% in the long run. At launch, it's expected to be slightly above 100%. In worst-case scenarios, if the gold price significantly outperforms ERG, the protocol could become undercollateralized.
When will it be available?
DexyGold is currently in beta testing phase with LP UI, Bank UI, and testnet functionality available. Testnet ERG is available via the faucet, and testnet Nautilus wallet is required for participation.
Resources & Documentation
"Unlike Terra's original MM algorithm, Dexy incorporates overcollateralization to prevent death spiral scenarios. The collateral is explicitly visible in the protocol-owned liquidity, ensuring transparency and stability."