Hybrid Algorithmic Stablecoin
Last updated
Last updated
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.
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.
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.
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.
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.
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:
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.
