The purpose of this overview is to present the various components of Superseed and assess the role each plays as part of a complete system. Superseed consists of a collective of components designed to create a system that automatically repays your loans.

• The Superseed Protocol is a general purpose Ethereum Layer 2 built on the OP Stack. It is open-source, permissionless and EVM-equivalent, enabling builders to seamlessly create using familiar tooling and infrastructure.

• SuperCDP is the native CDP (Collateralized Debt Position) protocol enshrined in the Superseed Protocol serving as the liquidity hub and reward mechanism for Superseed.

• Proof-of-Repayment is a unique programmatic reward mechanism, where every day a small percentage of the total supply of the native token is distributed through an auction mechanism. The proceeds of the auction are used to repay the loans of Supercollateral users.

• Supercollateral is a new economic primitive and plays a central role within the SuperCDP. Tokens with Supercollateral status allow borrowers who meet safety requirements (e.g., a collateralization ratio of 500%) to secure loans without interest. Additionally, all fees generated across the network are used to burn the debt of Supercollateral users.

• The Superseed Stablecoin is overcollateralized and is generated when users borrow against their assets on SuperCDP. To ensure stability, the protocol requires that the value of the collateral must exceed 150% of the stablecoin’s value.

SuperCDP

At the core of Superseed sits the native CDP protocol, built into the rollup protocol. It serves as the liquidity hub and reward mechanism for the network. CDP protocols allow users to lock an asset as collateral and mint and borrow a different asset, generally a stablecoin. Unlike Peer-to-Peer (P2P) Money Markets, where liquidity for borrowers is sourced from a pool of lenders, CDP lending protocols derive liquidity directly from the collateral provided by borrowers.

On Superseed, users can use various types of assets as collateral to mint and borrow the Superseed stablecoin. Collateral assets in the SuperCDP include the Superseed governance token, ETH, WBTC, and others

When collateral is locked into the SuperCDP, a collateralized debt position (CDP) is created, and Superseed stablecoins are generated. The protocol requires overcollateralization, meaning the value of the collateral must exceed 150% of the value of the stablecoins.

To withdraw collateral from the protocol, users must first repay their loan. If a CDP fails to maintain the required collateralization ratio, part of the collateral is auctioned off by the protocol to cover the debt, and a penalty fee is applied. When a user is liquidated or repays their loan, the stablecoins are burned by the protocol.

Interest rates within the CDP are determined by governance and are designed to provide stability to the stablecoin.

Supercollateral

SuperCDP stands out from other CDP protocols by using multiple sources of fees to pay off the loans of users who borrow against tokens designated as ‘Supercollateral’

Initially, Superseed’s governance token will be the first token granted ‘Supercollateral’ status. Supercollateral users that maintain a collateralization ratio of 500% will have their loans repaid for them and will not be required to pay any interest on the loan

There are a number of sources of fees that will be used for automatic loan repayment:

1. L2 sequencer profits

2. Interest generated from loans backed by non-supercollateral assets (e.g., ETH, wBTC) within our lending protocol

3. Revenue from Proof of Repayment

Proof-of-Repayment

The Superseed token has a yearly 2% supply inflation, which is programmatically distributed through a daily auction. In these auctions, participants compete to win the reward by committing the highest amount of stablecoins. These stablecoins are used to repay the loans of Supercollateral users.

The winner of the auction receives the daily reward and the stables that they committed for repayment get added to a repayment vault to be used for burning the debt of Supercollateral users, while the rest of the bidders who lost the auction can claim back the stables they committed.

Dynamic Repayment Vault

One of the core stabilization modules in the Superseed Lending Protocol is the Dynamic Repayment Vault. Borrowers who choose to manually repay their loans can do so directly, burning the stablecoin they initially minted as a loan. However, for Supercollateral users benefiting from self-repaying loans, the fees used for repayment are directed into a smart contract known as a repayment vault. This vault then systematically burns the debt of Supercollateral users on a pro-rata basis according to a predefined schedule. There will be one repayment vault, which dynamically alters the repayment rate.

The benefits of the Dynamic Repayment Vault include reducing the volatility of the repayment rate by following a programmatic schedule for burning the debt of Supercollateral users. Additionally, the Dynamic Repayment Vault acts as a stablecoin sink, which the protocol can utilize to stabilize the peg.

Superseed Stablecoin

Users can mint the Superseed stablecoin against any accepted form of collateral on the SuperCDP. The Superseed stablecoin is designed to maintain a peg as close as possible to $1. Superseed's design supports this peg through multiple structural solutions.

First, all fees generated by the Superseed Protocol are automatically converted into the Superseed Stablecoin and used to burn off the debt of Supercollateral users. Between sequencer fees, interest from borrowers and Proof-of-Repayment, there is a bid on the Superseed Stablecoin in all market conditions. The Superseed stablecoin serves as a debt tracking token, a medium of exchange, and a stable unit of account on the Superseed network. This overcollateralized and decentralized stablecoin will be integrated across the Ethereum ecosystem, providing a robust and reliable instrument that enhances liquidity and stability in decentralized markets.

Conclusion

The Superseed protocol reimagines what DeFi can achieve by integrating a Layer 2 foundation with an enshrined CDP lending platform and the innovative Proof-of-Repayment mechanism.

This combination creates an ecosystem that enables self-repaying loans and channels protocol revenue into further ecosystem growth. Superseed’s overcollateralized stablecoin, coupled with dynamic repayment vaults, provides robust stability and opportunities for creating a truly scalable decentralized stablecoin. Open-source and permissionless, Superseed is poised to drive the next wave of decentralized financial innovation