📖Introducing Floatcoin

An Anti-inflation Stablecoin Protocol Build on Base

Over the last year, we have seen many countries, led by the United States, implementing interest rate hikes and tapering measures to control inflation. However, the outbreak of COVID-19 changed the story worldwide.

The Pandemic

Due to the pandemic, many countries have experienced disruptions in supply chains, leading to shortages and price increases for various goods and services. Additionally, central banks around the world have implemented various monetary policies in response to the pandemic, which has also affected inflation rates.

According to recent data, the inflation rate in the United States has reached a 13-year high, with a year-over-year increase of 5.4% in June 2021. In other countries, such as Brazil and Russia, inflation rates have also risen significantly due to the pandemic.

With inflation continuing, people’s purchasing power of money gradually weakens, and the prices of goods and services continue to rise. Inflation leads to an increase in the cost of living for consumers, a decrease in the value of savings, and an increase in uncertainty in investment decisions.

The Stablecoins

As we all know, the original goal of Bitcoin was to create a decentralized, open-source currency that would be resistant to censorship, inflation, and government interference. However, the volatility of cryptocurrencies has created a need for stablecoins, which are in strong demand in this market. Stablecoins serve as alternatives to traditional fiat currencies, but they do not control fiscal or monetary policies that directly influence inflation.

Stablecoins are an important component of the crypto world. On the one hand, stablecoins can serve as a measure of value, and on the other hand, they can be used to hedge against price fluctuations in volatile crypto assets. As the overall value of the crypto world continues to grow, there is still great potential for the expansion of stablecoins. Stablecoins that are robust, versatile, and transparent have the opportunity to capture this vast market.

Recently, a stable currency bill H.R.2435 pointed out that since 2000, the purchasing power of the Federal Reserve Note has dropped by more than 40%, and since the passage of the Federal Reserve Act in 1913, its purchasing power has declined by 97%.

As the US dollar stablecoins are anchored to the US dollar at a 1:1 ratio, the same problem exists in the USD stablecoins, leading to the distorted measurement of the value of digital assets using stablecoins - the US dollar value of digital assets may rise, but the purchasing power for stablecoins does not increase synchronously.

Based on this fact, we propose Floatcoin, a protocol-native anti-inflation stablecoin, which will provide better value measurement and value preservation functions than fiat-anchored stablecoins.

Floatcoin

The initial price of $FLOAT is 1 US dollar, and the anchor price is adjusted daily based on the inflation rate provided by Truflation. For example, if Truflation's US inflation rate is 3.96% and has decreased by -0.01% compared to the previous day, then the $FLOAT anchor price will be adjusted to 1*(1-0.01%)=0.9999 accordingly. The advantage of daily adjustments is that price changes are smooth. In the long run, $FLOAT holders can ensure the purchasing power of their assets in the real world, and the $FLOAT price of crypto assets can also accurately reflect their value changes without inflation.

The Future of Floatcoin

Floatcoin will be issued and minted based on protocol liquidity. Initially, it will be over-collateralized by LP tokens from the DAI/USDC/USDT 3-token trading pairs (3LP). Compared to major stablecoins that rely too much on a single stablecoin, multi-asset backed stablecoins can unleash more liquidity while evenly distributing the protocol risk. By integrating issuance and trading into one, we can further unleash the potential of LP tokens.

Floatcoin will use the 3LP token as the critical collateral, 3LP will be the centre of liquidity, boosting Floatcoin as a DEX, a lending hub, and a stablecoin protocol. In the future, by including more interest-bearing assets like crvUSD or cbETH, the Floatcoin ecosystem will be further enriched.

On the first day of launch, our protocol will be fully open-source and ensure complete decentralization as well as minimal governance. We believe transparency is the greatest fairness to our holders, and decentralization is the only path to transparency.