A new stablecoin design is out and this one is thought from first principals and have some fundamental implications for Finance.

We have seen Ethena stablecoin design and how they have utilised Perps to deliver high yields to stablecoin holders.

Now, Autonomint has released a new stablecoin design using a new lego, dCDS to deliver high stablecoin yields to users.

How are the results?

Ethena Last 30 day yields - 0.375%

Autonomint Last 30 day yields - 20%

These yields are real yields. No token. No points and no funny business. Just pure dollar yields.

All of it retail-driven. $0 spent on marketing. 0 institutional LPs. (Currently)

While everyone is chasing Perps. Autonomint reimagined ‘options’ in a new delivery mechanism called dCDS (decentralised credit default swaps).

And It’s not just yields which Autonomint is offering.

Autonomint has brought a new use case for stablecoins that can fundamentally change the way risk is managed in Finance.

By combining stablecoins and dCDS, users can now hedge asset volatility risk at 70% lower costs.

What many don’t realize is that ‘stablecoins’ are at the end of day a token that is pegged to $1.

Autonomint theory is that buying stablecoin is basically buying a rolling put option with a right to sell 1 token at $1 at the end of every minute.

Given this view, the cost to hedge a particular asset can be decreased by minting stablecoin against the same.

Currently, ETH holders looking to hedge against volatility can do 2 things.

1. Buy a short ETH Perp and if ETH price decreases then they profit but if ETH price rises then they miss out on entire upside gains. The funding rates here are minimal and can be +ive/-ive.

So, why the hell would you hold a volatile token/asset if you can’t capture it’s upside. Currently, the only reason people utilize Perps is because of 10x - 100x leverage.

So, it’s definitely not a way to hedge your positions.

1. The second way is to buy a put option on ETH. Currently 1 ETH At the Money (ATM) Put option is selling for approx. $200 for a 1-month maturity.

Due to high ETH implied volatility, these options are very expensive so essentially not feasible for a user, LP, institution, lending protocol, AMM, staking or re-staking protocol etc. to incorporate this in their business models to offer users a way to hedge ETH price loss.

All of the crypto staking and re-staking market is going to consolidate over next years because the underlying prices are volatile and the staking/re-staking yields are only to nullify the inflationary effects of underlying asset minting.

It’s not a risk-free yield like it has been marketed to TradFi. If the underlying asset is going to fall by 15% within a span of few days/weeks then it’s not risk-free.

So, that’s why a lot of Institutional liquidity is rotating to stablecoins and earning yields through them.

But what if we can hedge the underlying asset volatility at 0 upfront costs and at 70% lower costs over time and then deliver the yields back in stablecoin.

So, here comes the Autonomint design.

Hedging 1 ETH or ETH LRT price on Autonomint is a combination of below

1. Minting Autonomint USDA+ stablecoin against ETH at 80% LTV

2. Using dCDS to hedge for 20% price loss.

If the ETH price decreases till 20% then dCDS is hedging for that loss but if the ETH price decreases beyond 20% then the earlier minted USDA+ stablecoin will act as a hedge.

The stablecoin is pegged to $1 so delivers a natural hedge which actually is enabled by sharing of risks among various decentralized participants coming together and always maintaining a 100% backing of stablecoin supply with redemption of USDA+ for USDT/USDC at any time.

A 3% - 4% of the minted stablecoin LTV is paid as option fees to dCDS users along with a 3% of the ETH upside. As the option fees is paid out of the LTV so no upfront fees is required to be paid by the ETH holder.

Also, as only 20% of the price loss is covered by dCDS so premiums are like 60% - 70% lower than market rates.

dCDS is exposed to volatility risk but within the last 1 month when the ETH has seen like more than 15% price decrease, the net yields in dCDS are 20% per month.

So, dCDS works and deliver exponentially better yields on stablecoin than any other stablecoin out there in the market.

That’s because dCDS yields are not derived from a single user but from every user minting USDA+ stablecoin. Also, dCDS users act as virtual option sellers and there is no liquidity fragmentation across price, maturities as seen in options.

dCDS is the most globally inclusive product. Users can deposit as low as $1 and can deposit almost any stablecoin or almost any decent liquidity volatile token and can then accrue high yields on the same.

If you are holding $HYPE or $AERO or $OP then you can keep on holding that and deposit the same in dCDS to accrue these high yields and capture a %age of ETH upside as well.

One of the main issues with existing on-chain stablecoin designs are that they are too much reliant on bullish crypto markets or leverage demand for their business models to work.

But when the markets turn bearish for a moment then the yields start drying up as demand for leverage decreases. Ethena yields also dried up recently when the markets turn bearish leading to negative funding rates.

But, Autonomint becomes the best place to park ETH or ETH LRTs in the bearish markets as now more users are looking to hedge their ETH. Also, demand for derivatives/volatility hedging is present on both bear/bull markets so Autonomint stablecoin always have a stable flow of demand.

Also, this design has the capability to lower the cost it takes to hedge any asset volatility. We can see airlines reducing their billions of dollars of fuel hedging costs to half by using stablecoins and dCDS as part of their commodities derivatives purchase.

The protocol has recently went live for all the users.

Start minting USDA+ now at : app.autonomint.com

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