The Defi boom has also raised concerns and discussions about stable currencies. One year ago, Defi was just a utopia like a castle in the air, and the stablecoin market was long dominated by USDT monopolies. But in fact, the market is a competitive market, and stabilizing the currency does not mean that there is only one currency in the market.
An important reason for not making rapid progress in stabilizing the currency market in the past is the lack of inclusion.
Since the function of stablecoin is to meet the trading needs of market players, to meet the free exchange between coins and French coins. Its price is mostly anchored in the dollar, taboo premium generation, so its intrinsic value growth is not reflected in the price, but to stabilize the amount of used currency.
But most people are confined to the trading level of the stablecoin and are not involved in the underlying anchoring mechanism. At the distributed financial market, the stability of the stablecoin comes from the market makers — short-sellers and contrat-sellers in two aspects.
What needs to be explained is that USDN is the stablecoin that issues in the blockchain NGK.IO, is also the tool that realizes the original token NGK exchange circulation, occupies the important position in the blockchain ecology.
First of all, there are three mechanisms for USDN smart contract stabilization algorithms:
Ø USDN currency: digital currency that can be freely traded;
Ø USDN bond certificates: certificates for USDN issuance and destruction;
Ø USDN equity index: for additional issuance USDN, incentive equity index holders;
The improvement over Grin and bitcoin is that the USDN algorithmic stablecoin uses the response of the core algorithm rather than a single fixed rule. For example, adjusting the supply of currency according to the market price of currency, which in turn affects the expected price of currency.
If the price of a stablecoin is higher than one dollar, the system will issue USDN, to bondholders to increase the supply of a stablecoin, to recover the price to about one dollar. On the other hand, the system will issue new bonds, buy back from the market USDN, reduce the total amount of USDN circulation, and push the price back around a dollar.
If the bonds in the market is fully paid, it still needs additional issuance. The system will reward the holders of the USDN equity index with all the additional USDN currency required under the smart contract, and will distribute the shares according to the held proportion of the USDN equity index.