However, in the recent few weeks, LUNA and UST’s spectacular collapse have been dominating headlines. At one point, LUNA was one of the most valuable DeFi projects, with over $32 billion in market cap. UST is a stable coin that is bridged onto the Ethereum blockchain and is intended to be worth exactly $1.

  • Stablecoins are an essential part of the rise of cryptocurrencies.
  • The ERG pool is designed to stabilize SigUSD at any time and absorb ERG’s volatility due to the overcollateralized ratio.
  • With a focus on decentralization, transparency, and a sound, conservative monetary policy is why SigUSD is superior to existing stablecoins.
  • However, SigUSD did NOT deviate from its $1 valuation for a single moment in time.
  • Means that there are a set of rules being enforced by the smart contract that dictate how the protocol can be used.
  • Instead of algorithms, a trusted firm issues coins on a smart contracting platform like Ethereum or Algorand, for instance.

One can hope that cryptocurrencies work as they are advertised and designed. Many are still guided by the original guiding principles propositioned by Satoshi, revolving around decentralization, security, and financial inclusion. Terra had a plan, but observers said the launch of the UST steered them from their original virtuous path. If you have been paying any attention to the world of cryptocurrency, odds are that you have heard about UST losing its peg and the Luna token crashing to less than $0.001.

The case for SigUSD on Ergo as a Sound Algorithmic Stablecoin to Power Crypto

The exchange rate will not change when you swap larger amounts. The transaction either succeeds exactly the way you confirmed it – or it is cancelled entirely. It will contact TokenJay to prepare the actual transaction – this might take some seconds – and show a confirmation screen. Please check it carefully as this is the transaction that will be executed on the blockchain when you confirm. Open the TokenJay app with the link below and navigate to the AgeUSD panel. If you are using Ergo Wallet App on Android, you can alternatively activate Mosaik plugins in the settings and navigate to tokenjay.app in the dApp section.

sigrsv

He is a Mechanical Engineer by profession and an activeTrader, whose first encounter with Bitcoin was in 2015—and by accident. Ever since, it has been an exciting journey where life-long friendships have been forged, and careers made and strengthened. With LUNA and UST reduced to ashes, USDT became the next focus. For a brief moment after UST went down, the USDT de-pegged (dropping as much as five percent from $1), causing jitters, and mass conversion to USDC, another stablecoin.

SigmaRSV (SIGRSV)

This ensures that most of the risk is placed on SigRSV holders, thus ensuring the stability of SigmaUSD. TokenJay has a very competitive interface fee of only 0.22% (min 0.02 ERG). Because we support users stabilizing the bank, the interface fee drops down to 0.01% (min 0.02 ERG) in case the reserve ratio is below 400%. Introducing SigmaUSD.io the first UTxO-based stable coin – an instantiation of the AgeUSD protocol. The foundation on which a new era of digital finance will be built.

With a focus on decentralization, transparency, and a sound, conservative monetary policy is why SigUSD is superior to existing stablecoins. Finally, on to the performance of the protocol over the past year. Since the launch of the SigmaUSD protocol, ERG has rallied from $2 to $18, back to $4, up to $19, and back down to $2 again. However, SigUSD did NOT deviate from its $1 valuation for a single moment in time. Ergo has been quietly building robust, secure and open source tools that this industry desperately needs.

sigrsv

Now, imagine we are at the current market cap of $7 million of SigUSD, but it is Gemini Dollar, say sometime in May 2020. Imagine what is going to happen to SigUSD once ErgoDex launches with its various SigUSD liquidity pools to both the price of Erg and the market cap of SigUSD. SigRSV is a trade where you need to watch the reserve, the price of erg, and the reserve ratio. If you want to redeem your SigUSD back to ERG you would go through a similar process.

Paying Gas Fees for Mining: A Must Needed Action?

This time you would select the redeem function on the Stablecoin page before sending SigUSD to the address you are provided. Once the transaction has been completed from your wallet, you will receive the corresponding ERG back in your wallet. In order to mint any coins you must first link your Ergo wallet. Linking your wallet ensures that any SigUSD/SigRSV you mint are properly sent back to you. It also protects your funds in the event of a failed transaction. A failed transaction could be a scenario where your transaction times out or the network experiences a heavy load.

sigrsv

When it comes to stablecoins, SigmaUSD is the clear winner, patiently awaiting the adoption it deserves. In reality, the UST protocol was designed to withstand a decrease in price so long as arbitrage between UST and Luna could keep pace with the bear market. When it became clear that this was not the case, Terra’s CEO began buying Bitcoin to prop up the value of UST, and the world of crypto began re-learning the first two lessons of Satoshi.

SigUSD and SigRSV

A crash of this scale should strike at least a little fear in everyone with a pulse! However, as it always is, the antidote to this fear is education. If you want to trust a stablecoin protocol, you sigrsv need to understand how it works and, most importantly, how it is fundamentally different from UST. The entire control of the stablecoin is encoded on a smart contract and recorded on the blockchain.

The AgeUSD protocol will give a boost to the upcoming ErgoDEX release by providing USD liquidity. With the introduction of https://cryptolisting.org/-SigUSD pairs, liquidity on theDEX will balance itself with the AgeUSD protocol. As usage increases, this will affect both ErgoDEX and the AgeUSD protocol in a mutually beneficial way, creating a sustainably flourishing environment for new projects. At that point, the “life cycle” of SigUSD, or the number of trades between minting and redemption may be important. This metric will be something to watch and track if you are interested in the value of SigRSV after the DEX launches.

The protocol holds the reserves between 400% and 800% to create healthy liquidity for both buyers, sellers and holders. After saving your Ergo wallet receiving address you are ready to begin minting SigUSD and SigRSV tokens. Do Kwon and his team bought BTC and other liquid currencies, including BNB and AVAX, as a cushion once they realized that UST wasn’t sufficiently backed.

The ERG is funded by ERG-SigmaUSD traders and those trading ERG for the reserve token, SigRSV. The value of SigRSV is calculated by factoring in the total number of ERG in reserve, the circulating supply of SigRSV, and the spot rates of ERG. The ERG pool is designed to stabilize SigUSD at any time and absorb ERG’s volatility due to the overcollateralized ratio. Since launch, the stablecoin has successfully maintained its peg to the USD despite the crypto bear market, which saw the prices of ERG drop from $19 to $2. Means that there is a reserve being held to give SigUSD its value.

However, a little imagination and critical thinking can bring you to understand the true systemic risk of UST and the Terra ecosystem. Seigniorage is much less common; it has historically been defined as the profit that governments can make by printing money. More simply, seigniorage is the value that can be captured when the cost for printing new money is less than the accepted value of that note. For example, the US government will pay far less than $100 to mint a $100 bill, and so creates value for itself in the process.

The most important aspect of risk is understanding the assumptions involved.