Introducing ArbiTen Finance: Dual Peg Enforcement Mechanisms for Stablecoin Stability
In the world of decentralized finance (DeFi), stablecoins play a crucial role in providing stability and liquidity. ArbiTen Finance is a new player in the stablecoin arena, but it comes with a unique approach to maintaining stability through dual peg enforcement mechanisms. Let's dive into how ArbiTen Finance sets itself apart from other stablecoin projects and what makes it stand out in the competitive DeFi landscape.
ArbiTen Finance combines two proven peg enforcement mechanisms, namely seigniorage and fractional collateralization, to create a robust system that aims to keep its stablecoin, ArbiTen, pegged to its target value. Seigniorage, as seen in projects like Tomb Finance, involves issuing new tokens when the price is above the peg to encourage minting and increase the effective collateralization ratio. On the other hand, fractional collateralization, similar to Frax and Iron Finance, requires a certain amount of collateral to mint stablecoins, which can be redeemed for the collateral when the price is below the peg.
The dual peg enforcement mechanisms of ArbiTen Finance are implemented through its native token, 10SHARE. As part of the seigniorage system, the single 10SHARE pool emits ArbiTen tokens, providing an intrinsic source of value and avoiding the risk of dropping to zero, which was seen in the case of Iron Finance's Titan token. As part of the fractional collateralization system, 10SHARE is required for ArbiTen minting and rewarded for redemption, strengthening the system's ability to maintain its peg.
To further ensure stability, ArbiTen Finance has set the 10SHARE TWAP (Time-Weighted Average Price) period to 45 seconds, cementing its utility in the redemption process. When ArbiTen is trading above the peg, the minting price rises, but not as much as the spot price, creating a minting discount below the spot price to encourage minting and add ETH to the treasury at a higher rate. This increases the effective collateralization ratio, making the system more resilient to market fluctuations. Additionally, 10BOND redemption bonuses are available above the peg, further incentivizing users to redeem ArbiTen.
Conversely, when ArbiTen is trading below the peg, no new ArbiTen is produced as 10SHARE staking rewards. Instead, ArbiTen is removed from the circulating supply through 10BOND purchases. Users can also purchase ArbiTen from the market and redeem it for 0.1 ETH worth of ETH plus 10SHARE token, providing a redemption option and maintaining the stability of the stablecoin.
ArbiTen Finance also has a DAO Treasury that is envisioned as a price stabilization fund, although it is considered a backup plan rather than one of the two main peg enforcement mechanisms. The DAO Treasury generates income from various sources, including pool deposit fees, minting and redemption fees, transaction tax from selling ArbiTen, and reinvestment income. The DAO Treasury can be utilized in several ways, such as buying ArbiTen when it is below the peg to stabilize the price, selling ArbiTen when it is far above the peg, covering development and infrastructural costs, and reinvesting in the ecosystem.
One of the key differentiators of ArbiTen Finance compared to other stablecoin projects is its unique approach to yield boosting through NFT staking. Users can boost their yields by staking eligible NFTs from Farmers, Tools, Land, and Majestic Minotaurs in the ArbiTen Finance pools. Farmers yield a 2% boost per NFT, Tools and Land yield a 3% boost per NFT, and Majestic Minotaurs yield a 3