Persia Dao Refresher!!
Why we need Persia Dao ? What is it all about So, what is the problem?
That we still do not have an independently valued digital currency. We think it’s pretty well understood at this point that Bitcoin is not a currency; it is money (an asset). The same goes for ETH, and any other “cryptocurrency” out there today. The perfect currency holds the same purchasing power today as in 50 years. It provides a stable and consistent foundation upon which contracts can be formed, financial planning can be done, prices can be marketed; basically, upon which an economy can run. This is impossible in absolute terms, but I don’t think anything out there even comes close to this today.
How are we addressing this problem ?
With dollar coins ( incorrectly dubbed “stablecoins”). At the time of writing, there are $89 billion in USD tokens circulating. They have become the primary trading pairs in crypto markets and the most popular assets in DeFi. There’s a strange irony to the fact that the most utilized cryptocurrency is really just a digitized dollar. While functional stablecoins may achieve a stable USD value, that does not mean they’re stable in purchasing power. Their real value changes just like dollars in a bank account, and that value is heavily reliant on the policies of the Federal Reserve and US government, and on the US economy.
Recently, there’s been a wave of algorithmic stablecoins seeking to emulate a dollar peg without collateral (or less than 1:1 backing). I believe we can go a step further. Each iteration in the line of algos has demonstrated different ways of achieving stability, and many of them work! What if we could achieve stability while still maintaining a floating market-driven price? This is what we are trying to achieve through Persia.
How it works:
Each Persia token is backed by 1 BUSD / FRAX in the treasury. However, tokens can’t be minted or burned by anyone except the protocol. The protocol only does so in response to price. When Persia trades below 1 BUSD/FRAX, the protocol buys back and burns Persia; when Presia trades above 1 BUSD/FRAX the protocol mints and sells new PRESIA. Because the treasury must hold 1 BUSD/FRAX and only 1 BUSD /FRAX for each Persia, every time it buys or sells it makes a profit. It either gets more than 1 BUSD/FRAX for the sale, or spent less than 1 BUSD/FRAX on the purchase.
The fact that the protocol holds BUSD /FRAX for each token allows us to say with certainty that Persia will not trade below its intrinsic value in the long term. This allows investments to be made with defined risk (1 BUSD /FRAX is your guaranteed long-term price floor), because the protocol can and will buy indefinitely below 1 BUSD/FRAX until no one is left to sell, even if it means supply is reduced to 0. In fact, an event like that would be immensely profitable to those who didn’t sell; they’d end up with a chunk of every token burned.
Holding BUSD/FRAX to back tokens also creates a yield generation opportunity. We could keep it all locked away in a vault, but that would be a waste. The protocol never needs more than a few percent of reserves on even the largest down days, meaning we are free to utilize the rest. We will plug those assets into yield aggregators and add the proceeds onto profits from buying and selling Persia.
The initial profit distribution will be: 90% to stakers and 10% to the DAO (these allocations will be changed if necessary, as decided by the DAO). All rewards are paid in Persia backed by BUSD/FRAX. This system maintains a stable intrinsic value and reduces the incentive role of appreciation in favor of accumulation, like with real currency: you try to get more dollars, you don’t hope your dollars become worth more (though we do have both).
So, how do I play this ?
The best way is to buy as close to or below 1 BUSD /FRAX as you can. The distance from 1 is the risk you take on (it’s actually negative below 1!). Regardless of where you buy, you can then stake your Persia or provide it to the BSC pool as liquidity and bond the LP token. In both cases, you earn a more Persia over time.
A model of the system (excluding treasury yield) at the initial policy state and various prices.
So why Persia Dao?
A As compared to other algorithmic stable coins, which aims to maintain 1:1 pegged to USD through rebasing. What makes Persia special is that it is an Algorithmic Currency Protocol that aims to retain purchasing power. What this means is that Persia does not necessarily need to be 1USD, its price can be higher based on market demand.
For Persia case, BUSD/FRAX has chosen to be the first collateral since it is easier to get to most people. There will be other collateral in the future, but we will just be using BUSD/FAX here for simplicity’s sake.
Each Persia token will be backed by 1 BUSD/FRAX in the treasury. The protocol has a burn/mint mechanic.
When Persia trades below 1 BUSD/FRAX, the protocol buys back and burn Persia.
When Persia trades above 1 BUSD/FRAX, the protocol mints and sells new Persia.
The protocol profits every time there is a buy or sell.
Most of the BUSD/FRAX in the treasury is also being deployed in yield farming. Which generates even more profits.
These profits will be value-adding to Persia. Initial profit distribution will be 90% to stakers and 10% to DAO.
