Mechanism, Mining and Governance of QIAN
What is QIAN?
QIAN is a stablecoin protocol based on Ethereum. It provides a one-stop liquidity solution for mainstream cryptoassets. It is committed to providing users with immediate access to liquidity by the assets they hold with low risk, no cost, and no loss of ownership. Users can add cryptoassets (such as ETH, HBTC, WBTC, USD stablecoins, mainstream exchange platform tokens, etc.) to the protocol and lock them to mint the stablecoins in the QIAN protocol (QUSD is the first stablecoin of the protocol in the future. Assets such as QHKD and QEUR will be launched soon), and stablecoins can also be returned to smart contracts to redeem their assets.
What kind of protocol is QIAN?
QIAN stablecoin protocol was developed and constructed by the QIAN stablecoin governance committee. After it is officially launched, it will gradually become a complete community-based governance. Specifically, QIAN is:
A license-free protocol to lock, mint, stabilize and govern tokenized assets;
Provide SDK/API for Payment, DApp and exchanges, which can simplify and expand the stablecoin user experience;
A mechanism to earn interest with QIAN series stablecoin assets;
Provide a reward pool that can increase liquidity and a decentralized governance community.
What problem is QIAN committed to solving?
There are already many tokenized assets (USD stablecoins) with U.S. dollars as the value standard on the Ethereum network. The transfer speed of this type of asset is relatively fast. The issuance volume has exceeded $10 billion, and it has been widely used in decentralized finance (DeFi) . Despite the above advantages, the US dollar stablecoins also have some defects, or imperfect mechanisms, such as:
Non-USD stablecoins are scarce, resulting in poor user experience outside the USD zone and users have to bear the risk of exchange rate fluctuations;
There is an upper limit on the issuance of stablecoins, the debt scale is restricted by the cost of holding currencies;
Liquidation Risk under extreme market conditions;
The asset over-collateralization rate is high, and the liquidity release ability is weak;
Minting fees increase the using threshold.
For the broad global market, with the exception of the United States, some developed countries in Europe, South Korea, and Japan, a large number of countries and regions currently have no compliant channels for cryptocurrencies to go in and out, but users in these regions have huge demands for cryptocurrencies usage and trading. Therefore, USDT has partially assumed the value of stablecoins in the absence of compliant funding channels, and has met the market needs of investors and users of cryptoassets. This is also the background of the increasing issuance of USDT and the increasing number of users. However, due to USDT's own compliance risks in the deposit and withdrawal of fiat currency, and the exchange rate fluctuations of US dollar assets against currencies in countries and regions such as Asia and Europe, users often bear additional losses and risks when using USDT as a measure of value.
QIAN itself is designed to solve these pain points. QIAN has made innovations based on the design of stablecoins such as MakerDAO and KAVA, introducing price balance and exchange rate arbitrage mechanisms to reduce risks under extreme market conditions. In addition, the QIAN series of stablecoins are based on excess cryptoassets and are issued completely on the chain without compliance risks. Due to the diversification of the underlying assets of the QIAN protocol and mainstream consensus, coupled with the internal stability mechanism of the system and the dynamic balance of the external exchange rate market, the security of its minted assets is relatively high. Besides QUSD, QIAN will issue stablecoins such as QHKD to meet the needs of users, so that users in various countries and regions can have a more secure and consistent value reference in their daily use habits in the field of crypto ecosystem.
How does QIAN work?
QIAN is a smart contract system built on Ethereum to meet the needs of stable token value assets. Its operating principle will be explained based on the first stablecoin based on the protocol, QUSD.
MINT To mint QUSD, users need to send the underlying assets to QIAN's smart contract. For QUSD, its underlying assets include not only cryptoassets such as ETH, HBTC, WBTC, HT, OKB, etc., but also stablecoins such as USDT, BUSD, and HUSD.
For example, if you send 5 HBTC to the QIAN contract, you can get a certain minting quota based on the price of BTC and the volatility index. The quota obtained by the user is measured by the USD exchange rate. This mechanism ensures that QUSD and USD maintain a 1:1 pegging basis.
Users can freely choose the amount of QUSD minted within the limit. The process of minting QUSD does not require any fees other than the gas fee of Ethereum or Binance Smart Chain.
The total amount of QUSD that users can mint is related to the number of locked assets. In theory, the total amount of QUSD minted can continue to increase according to the growth of the underlying assets.
Similarly, the operating principles of QHKD, QEUR and other assets that will be launched in the future will also be similar to QUSD.
Use. Users can send the minted QUSD to any Ethereum address or smart contract. Since the minting and usage of QUSD does not require permission, the crypto sset exchange can also freely add QUSD trading pairs, providing convenience for users worldwide to trade.
By providing liquidity to decentralized lending platforms such as ForTube, QUSD asset holders can also earn deposit interest. The longer users hold QUSD, the greater the probability that users will receive the “negative interest rate” incentive of the QIAN system, which is also the source of profit for QUSD holders.
Arbitrage. When the price of QUSD deviates from its value scale USD, there is room for arbitrage.
If the value of QUSD in the market depreciates, for example, the market price becomes 1 QUSD=0.9 USD, QIAN minters will buy QUSD from the market, and then redeem the locked assets from the contract at a price of 1 USD to obtain a difference of 0.05 USD. In the course of this transaction, QUSD is recycled, the number of QUSD circulating on the market decreases and demand increases, so its price will rise accordingly.
If the demand for QUSD in the market rises, for example, it becomes 1 QUSD=1.1 USD, minters will mint QUSD with the value of 1 USD, and then use the minted QUSD to sell it in the market to obtain a difference of 0.1 USD. During this transaction, the quantity of QUSD will increase and the price will return to the target value.
In addition, based on the price of QUSD and the exchange rate changes between USD and various foreign exchanges, various types of arbitrage opportunities will appear, providing investors with new trading targets.
Redeem. It means to redeem QUSD and exchange it for basic assets. The minting and redemption of QUSD does not require any fees, allowing users to have a truly lossless experience.
Governance of QIAN : Governance by KUN Token
Governance token KUN is included in the QIAN protocol by which users can make proposals and vote. Meanwhile , more value of KUN can be explored through motions.
Functions of KUN
KUN can fully guide the liquidity, utility and governance community of QIAN protocol, in which KUN mainly performs the following functions:
KUN can be used for the governance of QIAN system.If users want to initiate proposals in terms of governance of QIAN, they need to stake KUN first, lock KUN into the QIAN GOV Staking Contract to obtain the right to propose and vote.
Every KUN staker has the right to initiate a proposal. Since KUN will be staked, the user can only be motivated to initiate a proposal on important issues, thus ensuring the seriousness of the proposal.
QIAN system will support the function of Flash Loan. The income from daily operation such as flash loan will be used to purchase KUN in the market and deposit it into reserve contract,which can provide protection mechanism for QUSD.
Once QUSD fails to maintain the fixed exchange rate due to the insufficient value locked-in the contracts, for example, if the QUSD deviates significantly from its reference exchange rate, the QIAN Governance Committee may sell the KUN in the Reserve Contract in an open auction to obtain QUSD, thereby eliminating the under-valued lock-in contract and covering the loss until the system is fully collateralized again.
As mentioned above, if some of QIAN's underlying assets fail, the KUN portion belongs to the Reserve contract will be sold.
KUN will provide support for decentralized governance, and KUN stakers can vote on all parameters in the system, major business decisions, and the change of Governance Committee.
This mechanism ensures that KUN has the maximum impact in the hands of users who contribute to the utility and growth of the QIAN protocol.
This mechanism ensures that the users who contribute to the utility and growth of QIAN protocol can make the best use of KUN .
Governance Mode of KUN
The QIAN will be governed by a global community (DAO) of KUN Governors, rather than a single entity.
After the DAO is launched, the modification of each system parameter will be determined by these users.
QIAN's decentralized governance is expected to be realized in the coming months, when KUN stakeholders will be able to decide how the platform handles fees, the deletion or addition of underlying crypto assets, and the development of QHKD and QEUR.
If users want to participate in governance, they must stake KUN tokens and initiate or vote on proposals. The users who participate in governance are the governor of QIAN. The number of KUN tokens locked by users is directly proportional to their weight in voting.In addition, KUN governors will receive rewards corresponding to their staking amount, which are derived from KUN's governance mining, as well as all future revenue earned on the QIAN Protocol, such as Flash Loan revenue.
Distribution Mode of KUN
The QIAN stablecoin Governance Committee announced that the total supply of KUN is 12 million.
100% of KUN tokens will be generated through minting pool, liquidity pool and staking of KUN Governor, and the specific distribution proportion and speed will be published on the QIAN Governance Forum and the mining page of the official website.
Reward Mode of KUN
There are three kinds of reward methods, namely, minting reward pool, liquidity reward pool and governance reward pool respectively.
Among them, the mint reward pool and liquidity reward pool will be used to reward users who contribute to the liquidity and market scale of QIAN, and the governance reward pool will be oriented to users who participate in staking as KUN Governor.
Mnting Reward Pool
The M inting Reward Pool will provide a six-month mint incentive, and users will be able to acquire KUN at the beginning of QIAN's negative interest rate incentive (mint bonus).
The QIAN Governance Committee announced that the first phase of QIAN negative interest rate incentive will last for six months.
Users can obtain KUN as a reward by minting QUSD during the cycle and the reward speed will be adjusted accordingly according to the total circulation of QUSD.
The quantity distribution of KUN for minting QUSD is shown in the following table.
The maximum limit of KUN for minting mining is about 2.7 million.If the actual KUN mined is less than this value, the remaining KUN will be locked into the Reserve contract.
Liquidity Reward Pool
The second reward pool corresponds to the LP reward in DEX for QUSD trading pairs, KUN/QUSD will be open on Balancer Exchange and Equator Exchange.
The second reward pool provides rewards for the LP supplying liquidity for the KUN / QUSD pair in DEX .KUN / QUSD will be opened on Balancer exchange and Equator exchange.
[KUN Token Liquidity Incentive Distribution Chart]
Taking the L iquidity Reward Pool of KUN/QUSD on Balancer as an example.
In order to obtain the liquidity reward of KUN, users should mint QUSD, and put QUSD into the KUN/QUSD liquidity pool on Balancer so as to earn transaction fees and receive BPT. Then lock the BPT token on QIAN platform to obtain the KUN as a reward.
Governance Mining of KUN
By locking KUN into the QIAN GOV Staking Contract, the holder of KUN can get the incentive of KUN token as a reward. The specific value will be published in the QIAN Governance Forum.
The governance of QIAN protocol plays a vital role in the healthy development of the system. Therefore, with the increase of the deployment time of the QIAN protocol, the number of KUN awarded per block will also be adjusted to encourage the governors to lock KUN for a longer time and actively participate in the governance work of the protocol.
Purchase of KUN
In addition to obtaining KUN by providing liquidity, one of the simplest ways to obtain KUN is to purchase it through QUSD on a decentralized exchange.
For experienced DeFi users, most of the time, they purchase directly from Balancer or Equator using QUSD to enjoy the minimal gas and slippage.
QIAN Development Roadmap
QIAN has been deployed to the Ethereum and BSC networks on October 21, 2020 and is about to launch its protocol token trading pair KUN/QUSD on Balancer and Equator around October 26. In addition, QIAN will continue to turn on ecosystem rewards.
Next, QIAN will also release QIAN dashboard and QIAN governance system, enable community governance module, and open the staking reward.
For users who obtained KUN tokens, in addition to participating in liquidity mining, they can also stake KUN in the upcoming GOV Staking products of QIAN.
In addition, the address of the staked KUN token will receive the platform income distribution (from flash loan, external service, etc.) on a regular basis, so as to compensate the stakers for the work done in the governance and the additional risks undertaken.
In addition, QIAN announced the upcoming release of QHKD, QEUR and other QIAN assets.
QIAN will provide new value references for DeFi applications, reduce the threshold for users in Asia and other regions to access DeFi, and provide assistance for the popularization of open finance.