What is USC and How Does USC Work?
USC: The World’s First Scalable Stablecoin Protocol Backed by LSTs
Exploring Rebase LSTs
Rebase LSTs are a type of Liquid Staking Token (LST) whose quantity increases as the owner accumulates staking rewards. Notable examples include Lido's stETH and Stakewise's sETH2.For example, using Lido's stETH as a reference: Ethereum holders who stake their ETH through the Lido protocol receive stETH tokens in exchange. These tokens mirror the value of their staked ETH. As staking rewards accumulate, the stETH balance expands proportionally, a phenomenon called "rebasing."
Minting USC with ETH and LSTs
Chi Protocol allows users to mint USC, a capital-efficient stablecoin with intrinsic yield at a 100% collateral ratio, using ETH or rebase LSTs as collateral. Currently, the Chi Protocol accepts only stETH and ETH as collateral. However, governance may consider adding other rebase, non-rebase, and non-custodial LSTs in the future.
The minting process for USC consists of 2 stages:
Users deposit ETH or stETH, which are transferred to the USC reserves. Deposited ETH is automatically converted into stETH via Lido.
ETH Buffer
ETH Buffer: A small percentage of the ETH deposited into Chi Protocol remains unstaked. This reserve facilitates redemptions from the arbitrage contract when USC's price falls below 1 USD and the protocol holds excess reserves.
Stake USC & Earn
USC holders can stake their tokens to earn additional USC, stCHI, and stETH. They can also provide liquidity in the USC/ETH pool on Uniswap, earning stCHI incentives in addition to trading fees. Furthermore, USC/ETH LPs can stake their position in Chi Protocol to earn stCHI and stETH, and also participate in DSO to buy discounted CHI tokens while earning boosted trading fees on their positions.
Last updated