LogoLogo
Launch App
  • ⚡Get Started
    • 1️⃣Step 1: Connect Your Wallet
      • 💳Wallets: Best Web3 Options
      • 💰FOUR Ways to Get Funds onto the Shade App
      • 💰How to move tokens from a CEX to Shade
    • 2️⃣Step 2: Create a Viewing Key
    • 3️⃣Step 3a: Hit The Button -> Buy SHD in >30 seconds
    • 3️⃣Step 3b: Bridge
      • How to bridge to Secret Network
      • How to bridge assets from Secret Network to another chain
    • 4️⃣Step 4: Swap Assets
    • 5️⃣Step 5: Use our Features
      • 💲Bonds Feature
        • How to Claim Bond Rewards
        • How to Purchase a Bond
      • 🏦Borrow Feature
        • Borrow (Silk): How to take out and repay a loan
        • Borrow (Silk Earn): How to Deposit and Withdraw
        • Borrow FAQ
      • 📈Derivatives Feature
      • 📖History Feature
        • What is a transaction hash
        • How to view transaction history
      • 💧Pools Feature
        • How to Enter and Exit Liquidity Pools
        • How to Stake and Unstake
        • How to Claim Rewards
        • 'Mint LP Shares and Stake' vs. 'Mint LP Shares'
        • Liquidity Pool FAQ
      • 💹Portfolio Feature
      • ➡️Send Feature
      • 🔵SILK Feature
        • How to Buy Silk
        • SILK's Peg
        • SILK FAQ
      • 📍Stake Feature
        • How to Stake and Unstake
        • What is stkd-SCRT
      • ⚙️Utilities Feature
      • 🔁Wrap Feature
      • 💠NFTs
        • How to Purchase a Shade NFT
        • How to Verify NFT Ownership
        • How to Sell an NFT
        • How to Bid on an NFT
    • 6️⃣Step 6: Connect with Community
    • 📚Beginner Resources
      • What is SCRT
      • Convert SCRT <> sSCRT
      • ⛽Gas Fees
        • How to Increase Gas Fees:
  • 🌑Advanced Topics: Shade Metaengine
    • 🌑What is SHD
    • 🖥️Tech Stack
    • ✍️Principles
    • ⚕️Ethos
    • 🏛️Governance
    • 🏦ShadeDAO
    • 💰Tokenomics
    • 🌀SHD
    • ✔️Brand
    • 📜Tutorials
  • 🌑Advanced Topics: Apps
    • 🔵SILK
      • Minting & Redemption
        • Overcollateralized Minting
        • Collateral Redemptions
        • Bonds
      • Basket Composition
      • Peg Migration
      • Governance
      • Tutorials
    • 🌉Bridge
    • 💱ShadeSwap
      • Trading
      • Liquidity Providing
      • LP Staking
      • Asymmetric, Concentrated Liquidity
      • Shade Swap Contracts
    • 🦅Lend
      • Stability Mechanisms
      • Risks and Fees
    • 📓Bonds
      • Bond Types
      • Collateral Types
      • Illiquid Markets
      • Issuance Policy
      • Bond Tokenomics
      • Tutorials
    • ♟️stkd-SCRT
      • Feautures
      • User Stories
      • Governance & Validators
      • Tutorials
      • FAQ
    • 💱ShadeX - Money Market
      • Liquidations
      • Logs and Transparency
      • Risk Management
      • Configurations and Restrictions
      • Fees
      • Contracts
  • 💳Wallets
    • Keplr
      • Install Keplr
      • Create Keplr Wallet
      • Import a Keplr Account
      • Import a Ledger Account
    • Fina Mobile
  • Research
    • Audit Log
    • Stablecoins
Powered by GitBook
On this page

Was this helpful?

  1. Advanced Topics: Apps
  2. SILK

Minting & Redemption

SILK minting methods

Minting a stablecoin is the act of issuing a token that ultimately takes the form of a liability that the protocol must answer for at a later time via redemption or sale of the stablecoin for a corresponding amount of underlying promised value. The incentive for a protocol to issue a liability in the form of stablecoin to a user is on the basis of revenue received from the user for the service provided. With SILK, users repay Shade Protocol for the service provided primarily via interest payments as well as liquidation profit-sharing. SILK uses a hybrid model utilizing the following stability and minting mechanisms:

Method
Description

Overcollateralized Minting

A minting model that follows the tried and true collateralized lending of MakerDAO. An overcollateralized amount of volatile assets back a finite set of stable assets via a process of interest payment incentives and liquidations.

Collateral Redemptions

A redemption mechanism whereby SILK is redeemed against tranches of at risk lending positions.

Bonds

A mechanism whereby the protocol can repurchase or issue SILK at a discount or premium to help grow the treasury as well as maintain stability of the SILK peg.

Stability Principles

With many different stability mechanisms available for Shade Protocol, there becomes a need to address the collateralization philosophy of the protocol with respect to what stability and minting mechanism are most heavily relied on over the lifespan of the protocol.

The following are a set of stability principles for Shade Protocol:

  • Stability > Growth

  • SILK > SHD

  • Commerce creates stability

  • Build reserves for unforeseen future bad debt

  • Diversify where SILK is used in DeFi

  • Openly plan for the failure of SILK

  • Openly plan prevention steps in event of peg failure

  • Natural pessimism towards bridging solutions

  • Natural pessimism about quality of assets backing SILK

  • Recommended that collateralization ratio of SILK targets 90 - 150%

PreviousSILKNextOvercollateralized Minting

Last updated 1 year ago

Was this helpful?

🌑
🔵