Chi, the holy grail for scalability and LSTs

Chi, the holy grail for scalability and LSTs

Chi Protocol empowers users to utilize their LSTs or ETH as reserve assets to create the capital-efficient, decentralized, interest-generating stablecoin known as USC. Users can deposit either ETH or LSTs and, in turn, mint USC against them, always at a 100% collateral ratio.

If users choose to deposit ETH, it undergoes automatic conversion into LSTs through the reserves contract. As LSTs inherently generate interest when sitting in the reserves, Chi Protocol enables the distribution of interest earnings to CHI stakers, while USC stakers earn more USC from the dual stability mechanism, and stCHI.

As a result, unlike conventional stablecoins, staking USC generates a stable income with stablecoin interest and, USC stakers also earn stCHI, which automatically entitles them to the LST yield. This approach effectively harnesses the liquidity potential offered by LSTs and perfectly aligns with the protocol’s interests.

Chi Protocol also allows the governance token holders to earn high yield by staking their CHI tokens. The yield comes from the ETH staking rewards generated by the LST reserves. Moreover, CHI token holders can make higher returns than stakers by locking their CHI. This effectively boosts their ETH yields through locked CHI incentives that automatically earn native ETH staking yield of the collateral in the reserves.

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