With the upcoming release of Chi Protocol V2, we are preparing to launch the migration process for our users to upgrade their positions. This guide provides detailed instructions on migrating your V1 tokens to V2 tokens ahead of the official launch. The process is simple, incurs no additional protocol fees (aside from standard Ethereum network fees), and offers a transition to substantial improvements in reward mechanisms and user experience.

Tokens Eligible for Migration

Users will be able to migrate the following positions:

• Staked USC (V1) → stUSC (V2)
• Staked CHI/ETH LP (V1) → Staked CHI/ETH LP (V2)
• Staked USC/ETH LP (V1) → Staked USC/ETH LP (V2)

Key Improvements in V2

1. stUSC V2

• In Staked USC V1, users earned USC rewards weekly and were required to manually claim them.
• In stUSC V2, rewards will accrue automatically with every Ethereum block. Users’ stUSC balances will continuously increase without any manual action required, creating a smoother and more rewarding experience.

2. Staked USC/ETH LP V2

• In Staked USC/ETH LP V1, users earned stETH and CHI rewards weekly, with CHI rewards requiring a lock-up period of at least 4 weeks.
• In Staked USC/ETH LP V2, rewards will be distributed per block and will include stETH, weETH, and CHI, all provided as liquid rewards.

3. Staked CHI/ETH LP V2

• In Staked CHI/ETH LP V1, users earned stETH and CHI rewards weekly, with CHI rewards requiring a lock-up period of at least 4 weeks.
• In Staked CHI/ETH LP V2, rewards will be distributed per block and will include stETH, weETH, and CHI, all provided as liquid rewards.

How to Migrate

Migrating to V2 will be straightforward:

1. Navigate to the Mint Interface on the Chi Protocol platform (V1) by launching V1.

2. Select the token you wish to migrate (e.g., USC/ETH LP).

3. Input the amount you wish to migrate or press MAX to migrate all eligible tokens and Approve.

4. Press the Migrate button.

5. Confirm and execute the transaction in your wallet.

6. Upon successful confirmation, your V2 positions will appear automatically within the Chi V2 interface.

Additional Details

• Zero Migration Fees: There will be no fees applied to migrations, except for standard Ethereum network gas fees.
• No Time Restrictions: Users can migrate their positions at any time. The migration option will remain available indefinitely, providing full flexibility for all participants.

Final Notes

The migration to V2 marks a major step forward for Chi Protocol as we prepare for its official release. With automated reward accrual, liquid rewards, and improved efficiency, V2 is designed to enhance user experience and set a new standard for decentralised finance.

We encourage all users to familiarise themselves with the migration process in advance and to prepare for the upcoming launch. Stay tuned for further announcements and updates in the coming days.

Welcome to the future of Chi Protocol — V2 is almost here! 🚀

Migration Guide: Transitioning from Chi Protocol V1 to V2 was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

The evolution of decentralised finance (DeFi) necessitates stablecoins that balance stability, decentralisation, and scalability. Chi Protocol V2 represents a significant advancement in this domain, integrating innovative mechanisms to enhance collateralisation, risk management, sustainability and rewards.

Enhanced Collateral Framework with LRTs:
Chi Protocol V2 introduces Liquid Restaking Tokens (LRTs) as reserve assets, complementing the existing use of Liquid Staking Tokens (LSTs) and ETH. This extension diversifies collateral types, while enabling participants to mint $USC at a 100% collateral ratio and maintaining asset flexibility. This multi-collateral framework enhances diversification and aligns with decentralised principles by avoiding reliance on fiat-backed assets.

The Dual Stability Mechanism (DSM):
Central to V2’s architecture is the Dual Stability Mechanism (DSM), a sophisticated system that dynamically stabilises $USC. By adjusting reserves and liquidity conditions based on the $USC peg state (above, at, or below $1), the DSM ensures price stability across varying market environments. This mechanism addresses critical vulnerabilities seen in earlier stablecoin models, particularly those relying solely on algorithmic adjustments or under-collateralisation.

Sustainability Through Multi-Layered Revenue Sources:
Chi Protocol V2 establishes a sustainable reward model by integrating multiple revenue streams. These include staking yields derived from $stETH and $weETH, and protocol-level arbitrage opportunities within the DSM. By anchoring rewards to scalable and decentralised sources, the protocol ensures long-term viability while offering consistent yields to participants.

Advanced Token Structures for Optimised Utility:
V2 introduces $stUSC and $wstUSC, which enhance composability and user utility in DeFi. $stUSC accrues rebase rewards, increasing user balances over time, while $wstUSC provides value appreciation without balance fluctuations. These innovations cater to varied user preferences for yield optimisation and composability within DeFi ecosystems.

Decentralisation and Risk Mitigation:
In alignment with the ethos of DeFi, V2 prioritises decentralisation and censorship resistance. By avoiding reliance on fiat-backed reserves or centralised exchanges, it mitigates counter-party risks. Instead, the protocol leverages ETH-backed assets and distributes volatility risk across stakeholders, maintaining trustlessness and decentralisation.

Technical and Economic Impact:
Chi Protocol V2 exemplifies a hybrid approach to stablecoin design, combining stability mechanisms with robust collateral management. This ensures a stable asset that withstands market volatility while fostering decentralised liquidity. By leveraging advanced economic models, V2 addresses inefficiencies in prior stablecoin designs and enhances the composability of stable assets within DeFi ecosystems.

Conclusion

As DeFi expands, stablecoins like $USC must evolve to meet the demands of dynamic markets. Chi Protocol V2 offers a forward-looking solution that integrates technical precision with sustainable growth, establishing a new standard for decentralised financial systems. This innovation underscores the protocol’s commitment to robust, scalable, and decentralised stablecoin mechanisms.

Keep an eye on our social channels for more updates about the V2 launch!

Chi Protocol V2: Revolutionising Stablecoins was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

What is a Stablecoin?

Stablecoins are digital assets designed to maintain a stable value, typically pegged to a fiat currency like the US dollar or backed by other assets. This stability makes them ideal for trading, payments, and storing value within the volatile world of cryptocurrency. Stablecoins like USDC and Tether (USDT) are used extensively in both centralised finance (CeFi) and decentralised finance (DeFi) ecosystems.

However, stablecoins face an inherent design challenge known as the Stablecoin Trilemma, where they must balance three crucial attributes: stability, scalability, and censorship resistance. Achieving all three simultaneously has proven elusive, as each element involves trade-offs. Let’s explore each facet of the trilemma.

The Stablecoin Trilemma: Stability, Scalability, and Censorship Resistance

Stability

Stability is the core promise of a stablecoin — its value should remain consistently pegged to a reference asset, typically a fiat currency like the US dollar. Without stability, a stablecoin cannot function as a reliable medium of exchange or store of value. Fiat-backed stablecoins, such as USDC and Tether (USDT), maintain stability by holding reserves in traditional financial institutions. These reserves ensure that each issued stablecoin is backed by a corresponding fiat dollar or treasury bonds.

Study Case: USDC’s Price Stability
USDC has managed to consistently maintain its peg, even during times of market stress. Its stability is guaranteed by fully backed reserves held in financial institutions. However, this model relies heavily on trust in centralised entities and the assumption that these reserves are always accessible.

In contrast, algorithmic stablecoins like Terra’s UST aimed to maintain their peg through complex on-chain mechanisms, but in May 2022, UST dramatically lost its peg, causing a total collapse of the Terra ecosystem. This failure underscored the challenges in achieving reliable price stability without fully collateralised reserves.

Scalability

Scalability refers to the ability of a stablecoin to handle increased demand and transaction volumes without degradation in performance or security. Fiat-backed stablecoins, like Tether and USDC, are relatively scalable, as they can expand supply by increasing reserves held in banks. However, this model limits growth to the ability to amass more fiat collateral.

Study Case: DAI’s Scalability
Decentralised stablecoins, such as MakerDAO’s DAI, face scalability challenges due to over-collateralisation requirements. Each DAI must be backed by assets like Ethereum (ETH), typically requiring more than 150% collateral to ensure price stability. This inefficiency constrains the scalability of DAI, as the protocol requires significant locked capital to mint new stablecoins. As demand for DAI rises, so too does the demand for ETH, limiting its ability to scale quickly in comparison to fiat-backed alternatives.

In contrast, Tether (USDT) has expanded its supply dramatically due to its efficient use of reserves, making it the most widely used stablecoin globally. However, it is not free from criticism regarding its transparency and the quality of its collateral.

Censorship Resistance

Censorship resistance is a key feature of decentralised stablecoins, ensuring that no central authority can freeze or seize funds. While decentralisation offers greater freedom and autonomy, it often comes at the cost of regulatory compliance and the risk of state intervention. Centralised stablecoins, such as USDC and Tether, are vulnerable to censorship due to their reliance on centralised reserves.

Study Case: USDC’s Censorship
In August 2022, Circle, the issuer of USDC, froze $75,000 worth of USDC held in wallets associated with Tornado Cash, following sanctions imposed by the US Treasury. This move demonstrated the susceptibility of centralised stablecoins to regulatory interventions. While this ensured compliance with legal requirements, it highlighted the limitations of these stablecoins in offering true censorship resistance.

On the other hand, decentralised stablecoins, such as DAI, are governed by decentralised protocols and smart contracts, making them far more resistant to censorship. However, decentralised systems are often slower and less capital-efficient, as seen with MakerDAO’s complex governance process and over-collateralisation.

USC’s Position: A Comprehensive Solution to the Trilemma

Chi Protocol’s USC seeks to address the Stablecoin Trilemma by balancing stability, scalability, and censorship resistance through an innovative design. USC achieves this by leveraging Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs), which provide robust collateralisation without sacrificing decentralisation.

Stability: USC ensures stability through a mix of decentralised collateral sources and automated stability mechanisms, using yield-bearing assets like LSTs and LRTs to maintain its peg while generating rewards for users. This approach mitigates the risk of de-pegging, as seen with algorithmic stablecoins like UST.

Scalability: Unlike over-collateralised stablecoins like DAI, USC uses a more capital-efficient model. By integrating liquid staking and efficient stability mechanisms , it allows for the issuance of stablecoins without locking up excessive amounts of collateral, making it highly scalable.

Censorship Resistance: USC operates on a decentralised protocol, which ensures censorship resistance, as no central entity has control over the issuance or freezing of USC.

Conclusion

The Stablecoin Trilemma — balancing stability, scalability, and censorship resistance — remains a critical challenge in the design of stablecoins. While centralised stablecoins like USDC and Tether offer scalability and stability, they fall short on censorship resistance. Decentralised stablecoins, like DAI, offer censorship resistance but struggle with scalability and capital efficiency.

Chi Protocol’s USC presents a novel approach to overcoming these challenges. By utilising decentralised liquid staking and mechanisms, USC achieves stability and scalability without compromising censorship resistance, positioning it as a potential solution to the trilemma that has long plagued the stablecoin space.

The Stablecoin Trilemma: USC’s Position was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

The rise of stables outside of the West

A recent report from Chainalalysis highlighted the ravenous appetite for stables in the East-Asian region:

Eastern Asia Geos Report: Institutions Drive Adoption in 2024

As per Coin Geek:

A report by Chainalysis suggests that Eastern Asia received over $400 billion in value in stablecoins and other digital currencies between July 2023 and June 2024.

Recently, Mexico and Brazil announced that USDC would be available for businesses through banking operators. Outside of the Western World, we can safely say that every jurisdiction is eager to open up to crypto and provide their citizens with a fluid and secure way of handling their assets.

Russia, the most sanctioned country on earth, has also announced its intention to develop a stable at destination of international commerce;

Russia plans stablecoins, 2 crypto exchanges to circumvent sanctions - Ledger Insights - blockchain for enterprise

Stablecoins have never been so popular.

After a brief bearish spell, stablecoins are back on the forefront of crypto.

The recent data demonstrates its sustained popularity among crypto users:

As of today (29/09/2024), the total market cap of all the stables combined is flirting with its previous ATH around 188 billion dollars back in April 2022.

The market share is still unevenly distributed among 2 major providers, Tether and Circle:

Visually, the gap is striking:

Press review

After a short drawdown, crypto seemed to have become a distraught asset, before a recent bullish activity sent most tokens soaring.

'Strap In'-Serious $40,000 Bitcoin Price Crash Warning Issued As The Fed Suddenly Braces For A U.S. Dollar 'Crisis' That's Predicted To Spark 'Total Collapse'

“Total collapse”, was forecasted by serious newspapers and media.

Three weeks later, Ethereum is creeping back to $3000, BTC is recovering, alts are rising by 50% in most cases, and the negative coverage ceased. Behind the veil, smart money amassed more crypto.

BlackRock Continues To Buy Bitcoin: Holdings Now Reach 358,000 BTC Worth $22 Billion

What caught our attention in the midst of all the renewed hysteria, was the numerous headlines regarding stablecoins. At Chi, we have been convinced that stables can and should take the spotlight in the blockchain economy, not only because it’s financially sound, but also because people do need stables to both make money and use money.

There are three cases where stables are crucial:

• In developing/emergent economies where non-USD denominated currencies hinder citizen’s financial growth (Middle-East, Africa, Turkey, APAC, etc..)
• To preserve one’s assets, mostly where inflation is extreme (Argentina, Turkey, Brazil) and parry currency erosion
• To allow people from struggling economies to access global markets and access new technologies, mostly in war-torn regions, like Ukraine, Lebanon, Syria , etc..

The giants of well-established TradFi sectors are beginning to see the financial manna.

As the CEBR reported, there is a massive demand for stables:

Analysis by the Centre for Economics and Business Research (CEBR) and BVNK has shown that businesses and consumers in the 17 countries that they studied pay a premium to access stablecoins: on average almost 5% more than the standard US dollar price, rising to 30% in countries like Argentina. In 2024, it’s estimated these countries will pay nearly five billion dollars in premiums to access stablecoins, rising to an astonishing $25 billion by 2027. The demand is clear.

Let’s recap what some giants are currently working on.

Revolut and Robinhood to join forces on a new stable

This week, Bloomberg reported that the two leviathans of banking and trading announced their intention to work on a common stable project. It makes perfectly sense from an synergic standpoint, as Revolut is focused on internet banking and money transfers while Robinhood is the Uber of trading; popular, accessible and quick.

Bloomberg

They also seem to be much healthier than bigger competitors, according to their latest results:

Group revenues increased by 95% to $2.2bn (£1.8bn), from $1.1bn (£0.92bn) in 2022

Profit before tax reached $545m (£438m); net profit margin was 19%

Revolut added 12m new customers globally last year, totalling 38m in 2023 and reached 45m in June 2024

38% increase in customer balances to $23bn (£18.2bn) and 41% increase in paid subscriptions

Ethena to launch a stable backed by BlackRock

Another unexpected alliance, between Ethena, the famous stable protocol, and BlackRock, the biggest fund manager in the world:

The stablecoin will be backed by BlackRock’s tokenized BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which offers a stable value of $1 per token.

Called UStb, this new coin will be backed by fiat, unlike USDe, backed by crypto assets and futures. To be exact, USDe is a synthetic dollar, and not a stable per se.

Additionally, Ethena Labs mentioned its expansion into collateral offerings on centralized exchanges beyond existing integrations with exchanges like Bybit and Bitget.

Another reason which has been evoked is the funding conditions of USDe:

“Nevertheless, if required USDe backing composition can dynamically adjust between basis positions and liquid stable products in different interest rate environments and USDe can benefit from incorporating UStb during periods of weak funding conditions.”

Goldman Sachs-backed BitGo launches a new stable

Another interesting finding; the Wall-Street shark GS is backing a new stable:

Scheduled for launch in January 2025, USDS is backed by a combination of short-duration Treasury Bills, overnight repos and cash. It is designed to challenge major stablecoins like Tether and Circle’s USDC.

This new form of token is definitely an oddity in the landscape of stables, as its backing is at once bold and diversified.

BitGo marketed the stable as an asset focused on rewards, per the following chart:

MakerDAO rebranded as Sky updates DAI

A month ago, MakerDAO announced its name change, and also the release of its updated stable (DAI) under the name of USDS.
They also mentioned the governance token (MKR) being renamed to SKY.

The news was quite polemical, as Sky mentioned the possibility to freeze its stable, a manoeuvre quite absurd with regard to the finality of stables; decentralisation.

As of today, we still don’t know whether the freeze option will be maintained. Sky said, in a very strange statement, that a decentralised court may decide the fate of the frozen USDS, as per the Coin Telegraph:

“One of the things I imagine that could be interesting is something like an appeals process that actually gives everyone the right to go through decentralized governance and get a transparent reason for why they’re not allowed to have their freeze removed.”

We can imagine that it will deter many an investor to trust Sky with their precious, hard-earned money.

Conclusion

Stablecoins are capturing most of the current ebullition around crypto.

As a forerunner in stablecoins, Chi Protocol is well positioned to harness this global shift toward sound money.
After a protracted bearish vogue, which didn’t produce any kind of lasting impression on the markets, the titans of TradFi decided to change their narrative on crypto and provide DeFi services to billions of potential users.

We are eager to serve the stable revolution, with USC at the core of our protocol: the only stable that solves all the issues noted thus far.

With the possibility of taking the USD on-chain, the world can have access to decentralised finance and be on an equal footing with the most powerful economy in the world.

Stablecoin Market Update — Q3 2024 was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

As we continue our journey toward becoming the most powerful stablecoin in DeFi with mass adoption at the forefront, it is important to share the exciting developments happening within the Chi Protocol ecosystem. Over the past few months, our team has been hard at work building and optimising the protocol to bring users the best experience possible. Here’s an in-depth look at what’s been going on:

The New Frontend: Simplified & User-Friendly

Our new frontend is a modern interface which allows users to seamlessly interact with Chi Protocol V2’s underlying smart contracts. Designed with both crypto veterans and newcomers in mind, the new UI simplifies complex DeFi operations into a user-friendly format. The interface is intuitive, making it easy for anyone to mint USC, stake their assets, or track metrics. Whether you’re an expert or just entering the crypto space, Chi Protocol ensures that everyone can access and manage DeFi products with ease.

Reward Prediction & Comparison Tools: Take Control of Your Rewards

In DeFi, transparency and predictability are key. That’s why we’ve developed powerful calculator tools that empower users to estimate their rewards on stUSC. Additionally, we’ve introduced a reward comparison tool where users can compare their stUSC rewards against other stablecoin rewards like sUSDe and stUSDT. This functionality ensures that users can make informed decisions when planning their DeFi strategies.

Chi Points System: Rewarding Our Ecosystem

One of the most exciting developments is the introduction of the Chi Points System! With this, users will be able to track and accumulate Watts (Chi Points) across the Chi Protocol ecosystem. This rewards system is designed to benefit both long-standing users and new joiners, ensuring that everyone can earn Chi Watts for their participation. Stay tuned for more updates in the coming weeks as we release an article detailing the meaning behind Chi Watts and how cool this new system is!

Simplified Minting Process: Now With More Stablecoin Options

Minting USC just got easier! We’ve simplified the process so that users can mint USC using popular stablecoins like USDC and USDT. Additionally, we’ve integrated Across, enabling users to mint USC from L2 blockchains, in addition to Ethereum Mainnet. This multi-chain support expands accessibility and enhances the overall user experience.

For reference, visit the Chi x Across article

Comprehensive Analytics: Track Everything You Need to Know

Chi Protocol’s new analytics dashboard is a powerhouse for tracking all essential metrics. Whether it’s USC, CHI, Solvency, Reserves, or the Protocol’s revenue, users can monitor these vital stats all in one place. The new dashboard provides users with the insights they need to stay informed and up-to-date on their assets and the health of the protocol.

These accomplishments are crucial in solidifying Chi Protocol’s position in the market, providing both stability and growth opportunities for all users involved. All of these new developments are expected to roll out by Q4 2024, aligned with the Q4 2024 roadmap for the V2 release.

What’s Next?

We’re looking forward to releasing the Chi Points article soon, which will explain in more detail how Chi Watts will be used throughout the protocol. Additionally, we have several more features and optimisations in the works that will continue to push Chi Protocol forward as a leader in the DeFi space. Stay tuned for further announcements and updates!

Thank you for being a part of this journey. Together, we are redefining the future of stablecoins and DeFi.

Development Update — September 2024 was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the fast-paced world of decentralised finance (DeFi), stability, sustainability, and censorship resistance are essential. Chi Protocol V2 emerges as a groundbreaking solution, harnessing the power of Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs) to offer a secure, fully redeemable stablecoin backed by an innovative dual stability mechanism. This new version enhances capital efficiency, risk management, and overall stability, setting a new standard for what stablecoins can achieve.

Core Components: Stability, Sustainability, and Censorship Resistance

Chi Protocol V2 is built on three foundational pillars: Liquid Staking Tokens (LSTs), Liquid Restaking Tokens (LRTs), and robust automatic risk management. These elements work together to manage collateral price risks, ensuring that the stablecoin USC remains secure and fully redeemable, even during market volatility.

Key Features of Chi Protocol V2:

• USC Minting: USC can be minted against ETH, LSTs, and LRTs.
• Instant Redemption: USC is instantly redeemable for ETH.
• Liquid Staking: Supports stUSC and wstUSC across multiple blockchains (L1s and L2s).
• Liquidity Provision: Provides LP strategies for CHI/ETH and USC/ETH pairs, with rewards distributed in weETH, stETH, and CHI.
• Governance and Rewards: The veCHI locking mechanism enables governance participation and provides rewards in stETH and CHI.
• Enhanced Rewards Distribution: Rewards for all protocol participants are now distributed at a faster rate than in V1, with distributions occurring on a per-block basis.

Rebase and Non-Rebase Tokens : stUSC and wstUSC

Chi Protocol V2 introduces stUSC and wstUSC, expanding the utility and flexibility of the stablecoin:

• stUSC: A rebasable ERC20 token that allows users to earn rebase rewards by staking USC at a 1:1 ratio. The stUSC balance increases over time as users receive rewards, with the flexibility to unstake and reclaim their original USC along with any accumulated rewards.
• wstUSC: A non-rebasable version of stUSC, where the value increases instead of the balance. Users can convert stUSC to wstUSC by wrapping it, with each reward distribution appreciating the value of wstUSC. This version is ideal for those who prefer a fixed balance that gains value over time.

CHI: The Governance Token with Real Rewards

The CHI governance token is directly tied to the protocol’s reserves, rewarding holders through the staking of CHI/ETH LP tokens and veCHI. This structure incentivises active participation and ensures that governance token holders are aligned with the protocol’s success.

Dual Stability Mechanism (DSM): Ensuring Price Stability

At the core of Chi Protocol V2 is the Dual Stability Mechanism (DSM), designed to maintain USC’s price stability relative to USD. Unlike traditional stablecoins that hedge collateral price risk, Chi Protocol V2 uses the DSM and embedded risk management practices to keep USC pegged to $1, ensuring system solvency and stability across various market conditions.

Revenue Generation: Sustainable and Scalable

Chi Protocol V2 generates revenue from:

• LST and LRT Rewards: The protocol earns variable yields from Liquid Staking and Liquid Restaking tokens, growing in tandem with the protocol’s reserves.
• DSM Arbitrage: Revenue is also generated through internalised arbitrage within the DSM, linked to the protocol’s Total Value Locked (TVL) and the demand for USC.

These revenue streams are designed for sustainability and scalability, supporting the long-term viability of Chi Protocol V2.

Collateral Risk Management: Balancing Censorship Resistance and Stability

Chi Protocol V2 prioritises censorship resistance by avoiding reliance on fiat-backed stablecoins and centralised exchanges for delta hedging. Instead, it embraces ETH while distributing price risk across multiple stakeholders, including the protocol itself, governance token holders, and stablecoin holders.

Conclusion: A New Era of Stablecoins

Chi Protocol V2 is not just another stablecoin platform — it is a revolutionary step forward in the DeFi space. By combining permissionless access, capital efficiency, and sustainable rewards, Chi Protocol V2 offers a stablecoin solution that is robust, scalable, and fully aligned with the decentralised ethos of DeFi. With its innovative Dual Stability Mechanism, sophisticated risk management practices, and revenue-generating capabilities, Chi Protocol V2 is poised to redefine what stablecoins can achieve.

As we continue to build and refine Chi Protocol V2, we encourage the community to stay updated. Keep an eye out for more information and resources that we will be releasing soon about this exciting new version!

Introducing Chi Protocol V2 was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’re excited to announce our collaboration with Across and the integration of Across+ into Chi Protocol! This partnership will enable users to easily mint USC on Ethereum Mainnet from multiple L2 blockchains, including Base, Arbitrum, Optimism and Blast.

About Across and Across +

Across is an innovative interoperability protocol focused on delivering fast and affordable cross-chain asset transfers without compromising on security. It uses an intents-based architecture, where a third-party relayer swiftly fulfils user requests, ensuring a smooth and efficient experience.

Across+ enhances Across’s core bridging features by allowing users to bridge assets and complete additional actions within a single transaction. This integration simplifies the user experience and helps consolidate liquidity across chains, making it easier to manage assets.

Mint USC with Ease Using Across +

One of the most exciting features of this integration is the ability for users to mint USC on Ethereum directly from various chains in just one transaction using ETH or WETH. Supported chains include Ethereum, Optimism, Arbitrum, Base, and Polygon, among others. This streamlined process is powered by Across, allowing users to efficiently mint USC without needing to perform multiple steps or transactions. The interface is designed to make the experience as smooth as possible, ensuring that users can manage their assets effortlessly across different networks.

Earn Bridging Rewards on Optimism and Arbitrum

As part of this integration, users can earn up to 95% in rewards when minting USC from Optimism and Arbitrum. These rewards are distributed in OP and ARB tokens, respectively, and are designed to encourage users to leverage the efficient cross-chain capabilities provided by Across. Whether you are bridging from Optimism or Arbitrum, you can earn rewards on every transaction, making the process not only seamless but also cheaper.

About the Across LTIP Campaign and OP Rewards

Across has been awarded 1,000,000 ARB tokens as part of the LTIP campaign, which are being distributed as gas rebates to users bridging to Arbitrum. This includes a 95% rebate on bridge fees, covering both the Across LP fee and the destination chain gas fee.

Users can claim their 95% rebate on bridging costs directly from Across at Across Rewards, with rebates being distributed monthly around the 15th.

This rebate program applies to all Across+ transactions, encouraging efficient and cost-effective bridging.

Across is also distributing 750,000 $OP in bridging rewards after receiving a grant from the Optimism Collective. Users can earn $OP rewards by transferring assets to Optimism through Across, effectively reducing their bridging costs by 95%. This initiative supports the growth of the Optimism ecosystem and enhances Across’ role in cross-chain interoperability. The rewards can be claimed monthly, and distribution will continue until the $OP supply runs out, expected to last into late 2024. Users can only earn either $ACX or $OP rewards, not both, when bridging to Optimism.

Conclusion

In summary, the integration of Across+ into Chi Protocol marks a significant milestone in simplifying cross-chain asset transfers. With the ability to mint USC effortlessly across multiple L2 blockchains and the opportunity to earn substantial rewards in ARB, OP, and ACX tokens, this collaboration is designed to provide users with a seamless and rewarding experience. We encourage all users to take full advantage of these benefits and be part of this exciting journey as we continue to innovate and enhance the Chi Protocol ecosystem. Don’t miss out — start bridging and minting today!

Chi Protocol x Across: Seamless Cross-Chain Onboarding was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

1. Introduction: Ethereum Validators and Staked Ether

The Ethereum network has achieved a significant milestone, surpassing one million active validators who have collectively staked approximately 34 million ETH. This represents about 28% of the total Ethereum supply. Validators play a crucial role in securing the network by validating transactions and maintaining the integrity of the blockchain through its proof-of-stake (PoS) mechanism​ (Blockonomi).

2. Potential of Staking

Staking on Ethereum offers several benefits, including enhanced security, decentralisation, and financial incentives for participants. Validators earn rewards in ETH for their contribution, which encourages more participants to join the network. The rise of staking pools, such as Lido, has further democratised access by allowing smaller users to pool resources and participate in staking. This growing interest in staking is reflected in the substantial queue of validators awaiting entry, representing significant unstaked Ether ready to join the network (CryptoSlate).

3. Liquid Staking Tokens (LSTs)

Liquid Staking Tokens (LSTs) offer a liquid solution for Ethereum stakers, allowing them to stake ETH and receive a token (LST) in return. This protocol stakes to ETH validators and the LST represents ownership of staked ETH plus the Ethereum network rewards. These tokens can be deposited with platforms like EigenLayer for further use in restaking (CoinDesk). LSTs are widely adopted, with liquid staking protocols holding a total value locked (TVL) of over $52.9 billion (Cointelegraph) (DefiLlama)

4. Liquid Restaking Tokens (LRTs)

Liquid Restaking Tokens (LRTs) provide a liquid solution for those involved in the EigenLayer ecosystem. Users deposit an LST and receive an LRT in return. The LRT service then deposits the LST to EigenLayer, and the LRT represents the deposited LST plus EigenLayer points and other incentives. LRTs also pick Actively Validated Services (AVSs) on behalf of the holders (Liquid Collective). The cumulative TVL for LRTs is approximately $14.8 billion, with EigenLayer being a major player in this space. The Restaked Ratio is also growing each time. (Dune)

5. Similarities and Differences

Similarities:

Both LSTs and LRTs aim to enhance liquidity and flexibility for staked assets, allowing them to be utilised in multiple DeFi applications, generating rewards.

Differences:

• Functionality: LSTs provide liquidity and flexibility, while LRTs offer additional earning opportunities by allowing staked assets to support AVSs.
• Use Cases: LSTs are primarily for liquidity, whereas LRTs enable participation in multiple protocols, thus expanding the potential earning avenues. (Liquid Collective)​

In conclusion, both Liquid Staking Tokens and Liquid Restaking Tokens represent significant innovations in the DeFi landscape, providing increased liquidity and earning potential for staked assets. As the ecosystem evolves, understanding these token types is crucial for users seeking to optimise their staking strategies.

Chi Protocol v2 and LRTs: The upcoming Chi Protocol v2 will also include Liquid Restaking Tokens (LRTs) in its offering, stay tuned!

Liquid Staking Tokens vs Liquid Restaking Tokens was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the ever-evolving world of cryptocurrency, stability is a rare commodity. Amidst the unpredictable waves of market fluctuations, Chi Protocol has managed to maintain a steadfast commitment to stability and efficiency. Through innovative mechanisms and strategic manoeuvres, the protocol has not only kept the Collateral Ratio (CR) at a consistent 1:1 but also demonstrated resilience during market turbulence.

Ensuring Stability with CR Ratio and Redemptions

One of the key highlights of Chi Protocol’s recent performance is its ability to uphold a CR Ratio of 1:1 consistently. This robust ratio has been instrumental in maintaining user confidence and ensuring the security of the protocol’s operations. The protocol successfully satisfied redemptions worth approximately $300K, which accounts for nearly half of the USC supply. This impressive feat underscores the protocol’s capacity to handle large-scale transactions without compromising its stability.

Tackling Market Pressure and Maintaining the Peg

The market recently experienced significant sell pressure on USC, coupled with low liquidity, which caused the peg to fall below $1. However, Chi Protocol’s dual stability mechanism swiftly responded to these challenges, restoring the price to the desired $1 mark. This mechanism, designed to counteract adverse market conditions, effectively stabilised the value of USC and reinforced the protocol’s resilience.

Revenue Generation Amidst Volatility

Amidst market volatility, Chi Protocol has not only preserved stability but also capitalised on opportunities for revenue generation. By arbitraging the price of USC and leveraging deviations in the collateral ratio, the protocol has generated significant rewards. This strategic approach highlights the protocol’s ability to adapt and thrive even in the face of market uncertainty.

Strategic Adjustments in Supply and Liquidity

In alignment with its design, Chi Protocol has witnessed an increase in CHI supply while liquidity has been lowered. To strategically enhance liquidity and reduce the token supply, the protocol is expected to announce plans for buybacks and burns. These initiatives are expected to bolster the protocol’s liquidity and fortify its market position, ensuring long-term stability and growth.

Resilience Through Unprecedented Volatility

Since the onset of the COVID-19 pandemic, the cryptocurrency market has faced unprecedented levels of volatility. Throughout this tumultuous period, Chi Protocol has remained steadfast and stable, showcasing its robust infrastructure and strategic foresight. By maintaining stability during such significant market disruptions, the protocol has demonstrated its commitment to ensuring the security and confidence of its users.

Conclusion

Chi Protocol’s recent performance is a testament to its innovative approach and commitment to stability in the face of market challenges. By maintaining a 1:1 CR Ratio, implementing a dual stability mechanism, and strategically adjusting supply and liquidity, the protocol has successfully navigated the complexities of the cryptocurrency market. As the market continues to evolve, Chi Protocol stands as a beacon of stability, resilience, and strategic foresight.

For more detailed insights, refer to the CHI Protocol on Dune, USC data on Dune, and USC on CoinGecko.

Analysing the DSM Performance was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the rapidly evolving landscape of Decentralised Finance (DeFi), innovation and adaptability are essential for success. Among the notable players in this dynamic field is Everclear, formerly known as Connext. Everclear has emerged as a trailblazer, introducing groundbreaking solutions that promise to reshape the DeFi ecosystem. This article delves into the essence of Everclear, the xERC20 standard, and the strategic moves that have propelled it to the forefront of the industry.

What is Everclear?

Everclear, rebranded from Connext, is a modular protocol designed to securely transfer funds and data between various blockchains. This rebranding effort underscores Everclear’s commitment to addressing liquidity fragmentation across modular blockchains by introducing the first Clearing Layer for Web3. This Clearing Layer aims to coordinate global liquidity settlement between chains, thus addressing the pervasive issue of fragmented liquidity in the DeFi space​.(GlobeNewswire)​​ (Binance)​.

How Connext (Everclear) Works

The Everclear architecture is a sophisticated system designed to handle and settle cross-chain transactions efficiently. Here is an overview of its operation, highlighting the key components and processes:

Everclear uses a combination of on-chain contracts and off-chain agents to manage cross-chain transactions. It operates using three types of messages: Intent, Fill, and Settlement. Intents are created when a user initiates a transaction, while Fills are generated when a solver fulfils that transaction. These messages are periodically dispatched across chains via a transport layer, and settlements occur when both Intent and Fill messages are received on the clearing chain, leading to the solver being compensated. Funds are initially debited from the transaction initiator and held in a Spoke contract, where solvers deposit to fulfil intents. This allows for a decoupled settlement process that can occur on any solver-configured domain, enabling a global settlement flow.

The system comprises several components, including the Hub, Spoke, and Gateway contracts, which handle message formatting and dispatching. Agents such as Relayers, Cartographers, and Routers manage network transactions and provide a cross-chain view of network states. The transport layer utilises Hyperlane to ensure reliable message transport, making Everclear a robust solution for cross-chain transaction management.

Why Do We Need xApps?

Blockchains do not scale to the level of volume needed for mainstream adoption. Ethereum and other programmable blockchains solve this problem by distributing users, funds, and data across multiple parallel domains, such as sidechains and rollups. However, this creates a fragmented user experience. xApps abstract this multichain experience, allowing users to interact with applications without needing to understand or manage the underlying blockchain infrastructure​.(What is Connext? | Technical Docs)​.

The xERC20 Standard

Central to Everclear’s innovative approach is the xERC20 standard, an open cross-chain token standard (EIP-7281) that extends ERC-20 to address issues like token sovereignty, fungibility, and security faced by bridged tokens today. xERC20 introduces a burn/mint interface, a whitelist for bridges, and rate limits for each bridge. This results in tokens that can be transferred between chains with zero slippage, without requiring issuers to bootstrap liquidity for bridging, maintaining a single token version per chain, and offering enhanced security controls. As an open token standard, xERC20 ensures that token issuers are not locked into working with a single vendor or bridge​ ​.(Connect Network)​ (xERC20).

Chain Connectivity

Everclear’s expansive network connects to numerous blockchain ecosystems, including Ethereum, Binance Smart Chain, Polygon, and Avalanche, among others. This extensive connectivity enhances its appeal, providing users with unparalleled access to diverse DeFi opportunities​.(Binance)​​ (TechBullion)​​ (Connext Network)​.

Conclusion

Everclear stands at the forefront of innovation in the DeFi landscape, offering groundbreaking solutions to the challenges of liquidity fragmentation and cross-chain transactions. By rebranding from Connext and introducing the first Clearing Layer for Web3, Everclear is poised to redefine how decentralized networks interact and settle transactions. The implementation of the xERC20 standard and the extensive chain connectivity underscores Everclear’s commitment to security, efficiency, and user-friendly experiences. As the DeFi ecosystem continues to grow, Everclear’s pioneering approach and strategic advancements position it as a key player in facilitating a seamless, interconnected blockchain future.

Exploring Everclear: The First Clearing Layer was originally published in Chi Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.