# Hybrid Algorithmic Stablecoin

<figure><img src="/files/qDnGNnewzydrVzq6yJ5W" alt=""><figcaption></figcaption></figure>

## Technical Overview

**BRIGHTHUB** is a dual-token hybrid algorithmic stablecoin protocol designed to build a global crypto stablecoin ecosystem. It provides decentralized services in finance, banking, IoT, supply chain management, energy, real estate, and art, establishing a decentralized autonomous organization (DAO) centered around **USDB** to support the next generation of global entrepreneurs.

### Protocol Overview

**BRIGHTHUB** is a permissionless, trustless hybrid stablecoin platform that combines collateralization to address the stability issues of purely algorithmic stablecoins. It can scale rapidly and ensures trust through a combination of economics and cryptography. The system draws on the best practices of the Federal Reserve (fiat), Seigniorage Shares (fully algorithmic stablecoins), and Bitcoin (permissionless, trustless). Its source code is open under a Web3.0 license.

### Design Philosophy

**BRIGHTHUB** integrates multiple proven concepts into a single protocol:

* **Dual-Token System**:
  * **USDB**: A stablecoin pegged to $1.
  * **BHC**: A governance token designed to integrate blockchain technologies from various companies, generating fees, minting revenue, and over-collateralized value.
* **Monetary Policy Exchange**:\
  **BRIGHTHUB** uses automated market makers (e.g., PancakeSwap) to achieve price discovery and real-time stability incentives through arbitrage mechanisms.
* **Decentralization and Governance**:\
  **BRIGHTHUB** is a diverse, high-performance, and highly autonomous organization. Its components work together to provide full functionality. Community governance balances autonomy with a shared vision, avoiding active technical management.
* **Hybrid Algorithm**:\
  **BRIGHTHUB** is a hybrid stablecoin project, partially backed by collateral and partially by algorithms. The collateral-to-algorithm ratio depends on the stablecoin’s market pricing. If **USDB** trades above 1,theprotocolreducesthecollateralratio;ifbelow1,theprotocolreducesthecollateralratio;ifbelow1, it increases the collateral ratio.

## Price Stability Mechanism

**BRIGHTHUB** provides the stability of fiat currency while retaining the trading characteristics of cryptocurrencies. It addresses the global demand for stable money and the limitations of existing cryptocurrencies. The core solution is the combination of smart contracts and regulation, offering unprecedented control and transparency. **USDB** is designed as a trading medium with guaranteed liquidity, ensuring that arbitrageurs can always buy or sell **USDB**, creating a stable market with minimal price spreads.

The arbitrage mechanism is tightly linked to **USDB**’s intrinsic value. If **USDB**’s market price exceeds 1,arbitrageurscanmint∗∗USDB∗∗at1,arbitrageurscanmint∗∗USDB∗∗at1 and sell it at a higher price. This ensures **USDB**’s stability relative to the USD. Unlike Bitcoin and Ethereum, **USDB** aims to maintain price stability. While there is no predetermined timeframe for collateral ratio changes, as **USDB** adoption increases, users will prefer a higher proportion of **USDB** supply to be stabilized by algorithms rather than collateral.

The protocol’s collateral ratio refresh function can be called by any user hourly. If **USDB**’s price is above or below $1, the function allows a 0.25% change in the collateral ratio. Both the refresh rate and collateral ratio function can be adjusted through governance voting.

## Minting and Redemption Process

**BRIGHTHUB** uses a dual-token system. The minting and redemption process for **USDB** is as follows:

**Minting**:

* **Preparation**: Prepare USD collateral, such as **USDT** or **USDC**.
* **Process**:\
  ○ Send the corresponding proportion of USD collateral and **BHC** (based on the current collateral ratio) to the smart contract.\
  ○ The smart contract mints the corresponding amount of **USDB**.\
  ○ **USDB** is sent back to the user’s address.\
  ○ The corresponding amount of **BHC** is burned.
* Formula:\
  ○ (Y×Py)+(Z×Pz)=D(Y×Py​)+(Z×Pz​)=D\
  ○ Cr×(Z×Pz)=(1−Cr)×(Y×Py)Cr×(Z×Pz​)=(1−Cr)×(Y×Py​)\
  ○ DD: Newly minted **USDB** units.\
  ○ CrCr: Collateral ratio.\
  ○ YY: Collateral units transferred to the system.\
  ○ PyPy​: USD price of collateral YY.\
  ○ ZZ: **BHC** units burned.\
  ○ PzPz​: USD price of **BHC**.

**Redemption**:

* **Process**:\
  ○ Send **USDB** to the smart contract.\
  ○ The smart contract redeems the corresponding value of collateral.\
  ○ Collateral is sent back to the user’s address.\
  ○ The corresponding amount of **BHC** is minted.
* Formula:\
  ○ D×Cr/Py=YD×Cr/Py​=Y\
  ○ D×(1−Cr)/Pz=ZD×(1−Cr)/Pz​=Z\
  ○ DD: Amount of **USDB** to redeem.\
  ○ CrCr: Collateral ratio.\
  ○ YY: Collateral units transferred to the user.\
  ○ PyPy​: USD price of collateral YY.\
  ○ ZZ: **BHC** units minted for the user.\
  ○ PzPz​: USD price of **BHC**.

In the hybrid algorithm (collateral ratio < 100%), when **USDB** is created, **BHC** is burned; when **USDB** is redeemed, **BHC** is minted. This protects **USDB**’s value and prevents the network from being flooded with increasing supply.

#### Collateral Ratio Adjustment

The protocol adjusts the collateral ratio by 0.25% hourly. When **USDB**’s price is above 1,thecollateralratiodecreases;whenbelow1,thecollateralratiodecreases;whenbelow1, it increases. If **USDB**’s price remains below $1 for an extended period, the collateral ratio will gradually increase to 100%.

#### Recollateralization and Redemption

**Recollateralization**:

* When there is a gap between the current collateral ratio and the target collateral ratio, arbitrageurs can mint **BHC** to incentivize recollateralization and reset the collateral ratio.
* Formula:\
  ○ (Y×Py)×(1+Br)/Pz=BHC(Y×Py​)×(1+Br)/Pz​=BHC (received)\
  ○ YY: Collateral units required to reach the target collateral ratio.\
  ○ PyPy​: USD price of collateral YY.\
  ○ BrBr: **BHC** reward rate during recollateralization.\
  ○ PzPz​: USD price of **BHC**.

**Redemption**:

* When collateral supply exceeds demand, **BHC** holders can call the buyback function to exchange excess collateral value for **BHC**, which is then burned.
* Formula:\
  ○ (Z×Pz)/Py=Collateral(Z×Pz​)/Py​=Collateral (received)\
  ○ ZZ: **BHC** units deposited for burning.\
  ○ PyPy​: USD price of collateral YY.\
  ○ PzPz​: USD price of **BHC**.

**Liquidity and Staking**

**BRIGHTHUB** is designed as an open and transparent network, incentivizing new DeFi projects to deploy on it. **BHC** tokens will be distributed over several years through various mining methods and liquidity incentives. Users can deposit **PancakeSwap** or **Dswap LP** tokens into incentivized trading pairs to earn **BHC** rewards.

**VeBHC** is a fork of **Curve**’s **veCRV** code. Users can lock **BHC** for up to 4 years to receive up to 4x **VeBHC**. **VeBHC** balances decrease linearly as the lock period approaches expiration. **VeBHC** holders gain voting rights in governance proposals and receive regular rewards based on liquidity mining yields and **BHC** market prices.

Through these mechanisms, **BRIGHTHUB** aims to provide a stable, efficient, and decentralized financial ecosystem globally.


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