How do algorithmic stablecoins maintain their peg?

Algorithmic stablecoins on Ergo maintain their peg through a combination of over-collateralization, algorithmic supply adjustments, and market incentives. The AgeUSD protocol uses a dual-token system where reserve providers absorb volatility to maintain stability.

What makes Ergo ideal for stablecoins?

Ergo's eUTXO model provides superior security for collateral management, native oracle pools ensure reliable price feeds, and ErgoScript enables complex stability mechanisms while maintaining transparency and auditability.

How does the AgeUSD protocol work?

AgeUSD uses a reserve pool of ERG collateral and two tokens: SigmaUSD (stable) and SigmaRSV (reserve). Reserve providers mint SigmaRSV to add collateral and earn from fees and price appreciation, while users can mint SigmaUSD when the reserve ratio is healthy.

What are the risks of algorithmic stablecoins?

Main risks include under-collateralization during extreme market conditions, oracle manipulation, smart contract bugs, and liquidity crises. Ergo mitigates these through robust reserve requirements, decentralized oracles, and formal verification capabilities.

Can I build my own stablecoin on Ergo?

Yes! Ergo provides all necessary infrastructure: oracle pools for price feeds, ErgoScript for stability mechanisms, and proven protocols like AgeUSD as reference implementations. The community offers extensive documentation and support.

Algorithmic Stablecoins

Stable value storage without centralized control

Over-collateralized stablecoins with innovative AgeUSD protocol. Decentralized, transparent, and resilient.

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Key Features

Why Ergo is the perfect platform for algorithmic stablecoins

Over-Collateralized Stability

Maintain stable value through robust collateralization mechanisms and algorithmic adjustments

Decentralized Governance

Community-driven protocol parameters without central authority or single points of failure

Transparent Reserves

On-chain verifiable reserves and real-time collateral ratios for complete transparency

Efficient Liquidations

Automated liquidation mechanisms protect protocol solvency during market volatility

Multi-Asset Collateral

Support for various collateral types including ERG, wrapped assets, and LP tokens

Composable DeFi

Seamlessly integrate with other DeFi protocols for lending, yield farming, and more

Technical Implementation

How algorithmic stablecoins work on Ergo

How It Works

Algorithmic stablecoins on Ergo maintain their peg through smart contract mechanisms that automatically adjust supply and demand based on market conditions.