General
What is pStability Protocol?
pStability is a decentralized borrowing protocol that allows you to draw interest-free loans against pDAI used as collateral. Loans are paid out in pSTABLE (a USD-pegged stablecoin) and must maintain a minimum collateral ratio of 110%.
In addition to the collateral, the loans are secured by a Stability Pool containing pSTABLE and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidation.
pStability as a protocol is non-custodial, immutable, and governance-free.
What’s the motivation behind pStability?
Stable-value assets are an essential building block for PulseChain applications and have grown to represent tens of billions of dollars in value.
However, the vast majority of this value is in the form of fiat-collateralized stablecoins like Tether and USDC. Decentralized stablecoins like DAI and sUSD make up only a small portion of the total stablecoin supply, meaning the vast majority of stablecoins are centralized.
pStability addresses this by creating a more capital-efficient and user-friendly way to borrow stablecoins. Furthermore, pStability is governance-free, ensuring that the protocol remains decentralized.
What are the key benefits of pStability?
pStability Protocol’s key benefits include:
0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt
Minimum collateral ratio of 110% — more efficient usage of deposited pDAI
Governance-free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment
Directly redeemable — pSTABLE can be redeemed at face value for the underlying collateral at any time
Fully decentralized — pStability Protocol contracts have no admin keys and will be accessible via multiple interfaces hosted by different Frontend Operators, making it censorship-resistant
Can pStability be upgraded or changed?
No. pStability has no admin key, and nobody can alter the rules of the system in any way. The smart contract code is completely immutable.
How can I use pStability?
You first need to choose a web interface (aka frontend) to access the system. pStability can be accessed through community-hosted frontends or by third-party applications and integration services.
What are the main use cases of pStability?
Borrow pSTABLE against pDAI by opening a Vault
Secure pStability Protocol by providing pSTABLE to the Stability Pool in exchange for rewards
Stake PRINT to earn the fee revenue paid for borrowing or redeeming pSTABLE
Redeem 1 pSTABLE for 1 USD worth of pDAI when the pSTABLE peg falls below $1
What are pSTABLE and PRINT?
pSTABLE is the USD-pegged stablecoin used to pay out loans on the pStability Protocol. At any time, it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.
PRINT is the secondary token issued by pStability Protocol. It captures the fee revenue generated by the system and incentivizes early adopters and frontends. The total PRINT supply is capped at 100,000,000 tokens. For more information on how the tokens are allocated and released over time, please refer to PRINT Rewards and Distribution.
What do I need in order to use pStability?
To borrow pSTABLE, all you need is a wallet (e.g., MetaMask) and sufficient pDAI to open a Vault and pay the gas fees.
To become a Stability Pool depositor or PRINT staker, you need to have pSTABLE and/or PRINT tokens. pSTABLE can be borrowed by opening a Vault, while PRINT can be earned as a Stability Pool depositor. You can also use PulseX exchange to buy the tokens on the open market.
Does pStability Protocol charge any fees?
There is a one-off fee whenever pSTABLE is borrowed and when pSTABLE is redeemed:
For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in pSTABLE).
For redeemers, there is a redemption fee on the amount paid to users by the system (in pDAI) when exchanging pSTABLE for pDAI. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.
Both fees depend on the redemption volumes, i.e., they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down” while redemption volumes are low.
The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system somewhat attractive for borrowers even in phases where the monetary base is contracting due to redemptions. Other than that, the two fees are identical.
How can I earn money using pStability Protocol?
There are two different ways to generate revenue using pStability:
Deposit pSTABLE to the Stability Pool and earn liquidation gains (in pDAI) and PRINT rewards.
Stake PRINT and earn pSTABLE and pDAI revenue from borrowing and redemption fees.
Can I lose my funds?
As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
You are a borrower (Vault owner) and your collateral in pDAI is liquidated. You will still keep your borrowed pSTABLE, but your Vault will be closed and your collateral will be used to compensate Stability Pool depositors.
You are a Stability Pool depositor and your deposited pSTABLE is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below 110%, you will receive more pDAI in return with a very high probability. However, if pDAI decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that pSTABLE isn’t perfectly pegged to the USD and can deviate slightly in both directions under certain market conditions.
Although the system is diligently audited, a hack or a bug that results in losses for the users can never be fully excluded.
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