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The primary motivation behind the Alternity Protocol is to address the growing demand for a stable, decentralized, and Yuan-pegged financial instrument in the DeFi ecosystem. As the global economy continues to evolve, the need for diverse stablecoin options that cater to various markets becomes more evident.
Recognizing China's growing influence and the rising importance of the Yuan, Alternity offers an alternative solution with a Yuan-pegged stablecoin, providing diversification, risk management, and a more robust DeFi ecosystem.
Alternity's key benefits include:
- 0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt
- Minimum collateral ratio of
110%— more efficient usage of deposited ETH
- Governance free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment
- Directly redeemable — LCNY can be redeemed at face value for the underlying collateral at any time
- Fully decentralized — Alternity contracts have no admin keys and will be accessible via multiple interfaces hosted by different Frontend Operators, making it censorship resistant
No. Alternity has no admin key, and nobody can alter the rules of the system in any way. The smart contract code is completely immutable.
You first need to choose a web interface (aka frontend) to access the system, or you can use the protocol directly via smart contracts.
- 1.Borrow LCNY against ETH by opening a Trove
- 3.Stake ALTR to earn the fee revenue paid for borrowing or redeeming LCNY
1 CNYworth of ETH when the LCNY peg falls below
LCNY is the Yuan-pegged stablecoin used to pay out loans on the Alternity protocol. At any time it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.
ALTR is the secondary token issued by Alternity Protocol. It captures the fee revenue that is generated by the system and incentivizes early adopters and frontends. The total ALTR supply is capped at
100,000,000 tokens. For more information on how the tokens are allocated and released over time, please refer to ALTR rewards and distribution.
To become a Stability Pool depositor or ALTR staker, you need to have LCNY and/or ALTR tokens. LCNY can be borrowed by opening a Trove while ALTR can be earned as a Stability Pool depositor. You can also use Balancer or another (decentralized) exchange to buy the tokens on the open market.
There is a one-off fee whenever LCNY is borrowed, and when LCNY is redeemed:
- For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in LCNY).
- For redeemers, there is a redemption fee on the amount paid to users by the system (in ETH) when exchanging LCNY for ETH. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.
Both fees depend on the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.
The fees cannot become smaller than
0.5%(except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at
5%, keeping the system (somewhat) attractive for borrowers even in phases where the monetary is contracting due to redemptions. Other than that, the two fees are identical and are depicted as "Fee" in the following exemplary chart:
There are two different ways to generate revenue using Alternity:
As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
- You are a borrower (Trove owner) and your collateral in ETH is liquidated. You will still keep your borrowed LCNY, but your Trove will be closed and your collateral will be used to compensate Stability Pool depositors.
- You are a Stability Pool depositor and your deposited LCNY is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below
110%, you will receive more ETH in return with a very high probability. However, if ETH decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that LCNY isn't perfectly pegged to the CNY, and can deviate slightly in both directions under certain market conditions.
The name 'Alternity' captures two concepts: the emergence of the Yuan as an alternative currency to the USD and the rise of decentralized stablecoins as alternatives to centralized fiat-collateralized stable assets.