Introducing Stabilized Set Dollar

5 min readJan 9, 2021

What is Stabilized Set Dollar?

Stabilized Set Dollar (SSD) is an algorithmic stablecoin that stabilizes itself to 1 USDC peg. In order to stabilize, it incentivizes market participants to voluntarily increase or decrease the token supply. It is decentralized, censorship-resistant and doesn’t use any collateral backing.

SSD is inspired by Empty Set Dollar (ESD) and Dynamic Set Dollar (DSD). It’s a fork of DSD with slight changes. We basically aimed to follow the proven success of DSD to ultimately provide people better APRs and incentives while not breaking the current security audit of the code.

How does Stabilized Set Dollar Works?

To meet the optimal market demand, SSD’s total supply can either increase or decrease to return SSD back to 1 USDC peg. However, unlike rebase tokens such as BASE, SSD doesn’t increase or decrease the token supply by directly adjusting the amount of tokens in holder’s wallet. The supply of SSD changes through voluntary actions of its holders. This is because SSD offers incentives for its holders to voluntarily increase or decrease the token supply.

As market demand for SSD grows, the trading price of SSD increases above the 1 USDC peg, which causes new SSD to be minted. 60% of the newly minted SSD is distributed to SSD holders that bought coupons and that have bonded their SSD inside the DAO, while the remaining 40% is distributed to Uniswap Liquidity Providers. This in turn decreases price of SSD back to 1 USDC peg.

When the market demand for SSD decreases, and the price of SSD decreases below the 1 USDC peg, SSD token holders can burn their SSD to acquire coupons at a discount price. These coupons are redeemable for newly minted SSD so it creates the incentive to burn SSD which in turn increases the price back to 1 USDC peg.

These potential supply expansion or contraction events happen 12 times (epochs) a day, every 2 hours. Within the epoch, the token price is measured to decide if a supply change is necessary.

Stabilized Set Dollar Mechanics

Bonding

Bonding is the act of locking SSD in the Stabilized Set Dollar DAO. It prevents manipulations and flash loan attacks during supply expansion and contraction events. Holders lock their coins in the DAO in order to gain voting or reward benefits. Locking period for DAO is 24 epochs/two days once bonded and 24 epochs once un-bonded. Rewards are still automatically added to bonded amount. Also, you can bond your Uniswap LP tokens and earn rewards by providing liquidity. LP token locking period is 12 epochs/one day.

Staging

When entering the DAO, tokens must pass through a staging phase. It’s a just an approval transaction that user accepts. Holders are allowed to interact with the DAO by bonding or un-bonding SSD or LP just once per epoch. Staging is necessary here to control the deposit and withdrawal of tokens. This is why holders has to stage SSD into the DAO, which can then be bonded.

Coupons

Coupon is the method used to shrink the money supply. When the total token supply contracts, the DAO incentivises users to voluntarily burn their SSD for coupons at a discounted SSD price depending on the debt ratio. In the event of supply extension, coupon holders will be able to redeem their coupons for SSD. Coupons expire after 45 days.

Epochs

Epoch is length of time between adjustment of total SSD supply. In SSD ecosystem 1 epoch equals 2 hours, 12 times daily. Within the epoch, the token price is measured to decide if a supply change is necessary. Holders receive rewards at the end of every epoch if it expands.

Bootstrapping

The bootstrapping period is the initial launch period that brings SSD to a minimum supply from which it can organically grow. During this period the supply growth per epoch is fixed at 4.5% per epoch for 180 epochs.
After the bootstrapping period is over, the supply regulation will solely depends on the Uniswap TWAP (Time-Weighted-Average-Price) of SSD.

Differences Between DSD

SSD is a slightly modified fork of DSD. DSD is modified fork of ESD and as explained in the ESD white paper, “[i]nstead of reinventing the wheel, we aim to construct [ESD] using already existing primitives where possible. This allows for minimal implementation with few unknown unknowns.”. So just as ESD uses Basis and 0x Staking as foundation, and DSD uses ESD, we use DSD as our strong foundation because they are proven.

These are the same between SSD and DSD:

Epoch Duration of 12 epochs per day
Rebase Amount of 3% in one epoch
Supply / Reward Mechanism of 60% to coupons/bonded holders and 40% to liquidity providers

These are different between SSD and DSD:

Bootstrapping period of 180 epochs aiming 1.54 USDC
Coupon Expiry is expanded to 45 days
DAO Exit Lockup reduced to 24 epochs

Security

SSD is a fork of Dynamic Set Dollar (DSD) and Dynamic Set Dollar is a fork of Empty Set Dollar (ESD) which is security audited by Certik. DSD and ESD currently work without any security incidents. We made changes that have nothing to do with actual working of the code; coin name change and constant changes that you can view on Github comparison view. So we can say that the code is security audited, however please DYOR and check the security audit as well as minor changes we did on Github.

SSD as well as ESD and DSD are mintable by their natures. However these functions are used algorithmically to increase the supply appropriately in case of SSD trades above 1 USDC peg and supply expansion is necessary. You can check our code on Github to see that only 100 SSD is minted to deployer of the SSD contract. You can also check Etherscan contract history that no one in SSD team (ecosystem) owns large supply of coins that may affect the price.

Our Team

We are developers working to create a decentralized and permissionless financial system. Even though the code is audited, since yield farming and using DeFi protocols poses risks, just like ESD, DSD, TSD and many other teams we chose to be anonymous as well. You can contact us on stabilizedset@protonmail.com or speak with some of our team members on Telegram. We will be happy to answer your questions.