Stellar Community Fund

By OrbitCDP

OrbitCDP: CDPs on Stellar

SCF #21

$33.0K

Legacy v5.0 Activation Award

Awarded

Products & Services

Product Overview for Activation Award Phase:

We have a much more detailed technical document available at the link above; but for your convenience have tried to condense it to the most important points here. We still encourage you to read our full technical document which will be the basis for our activation award and which will be further refined to perfection during the first 6 week period.

CDP Smart Contract Logic:

Product Description: We’re developing a Collateralized Debt Position (CDP) system on Soroban, Stellar's smart contract platform. This MVP will enable users to engage with a USD-pegged stablecoin system using XLM as collateral.

Problem and Solution: The product addresses the need for a decentralized stablecoin on the Stellar network, providing users with a mechanism to leverage their XLM holdings without selling. This serves the audience seeking to maintain exposure to their crypto assets while accessing liquid capital.

Benefits: - Accessibility: Users gain access to stablecoins without relinquishing their XLM holdings. - Stability: Offers a hedge against volatility in the crypto market. - Decentralization: Ensures transparency and trustlessness, key tenets of the blockchain community.

How it Works and Uses Stellar/Soroban: - Open/Close Functions: Users interact with the smart contract to lock XLM and mint a stablecoin. The reverse process extinguishes the stablecoin and returns the XLM. - Interest Calculation: Utilizes a predetermined formula to calculate the interest owed over time on the minted stablecoin. - Collateralization Ratios: Sets parameters for the amount of XLM required to mint stablecoins, ensuring the system remains solvent even during market downturns.

This first phase includes a full definition of technical details and a version 1 of the Soroban-based smart contracts, ensuring the foundation of the CDP system is solid, functional, and ready for further development.

Future Phases:

Interface and Monitoring (Phase 2):

Product Description: This phase involves developing a user-friendly interface and monitoring system to manage CDPs. The goal is to provide a transparent view of the user's collateral status and potential liquidation scenarios.

Problem and Solution: CDP management can be complex and opaque. A dedicated UI and monitoring tools simplify the experience and help users make informed decisions to prevent liquidation.

Benefits: - User Empowerment: Empowers users with real-time information on their CDPs. - Risk Mitigation: Early warning systems for approaching liquidation thresholds help users act promptly to secure their positions.

How it Works and Uses Stellar/Soroban: - UI: Allows for direct interaction with the Soroban smart contracts, letting users open, monitor, and close CDPs. - Monitoring Tools: These tools observe the smart contracts and alert users about their CDP status, using off-chain processes until on-chain oracles are available.

Deployment and Testing (Phase 2 + 3):

Product Description: Deployment and testing will likely happen both in phase 2 and phase 3. First we focus on deploying the smart contracts to the testnet for rigorous testing, followed by a security audit before mainnet deployment, during phase 3.

Problem and Solution: Deploying untested smart contracts can lead to security vulnerabilities. Testnet deployment and audits ensure the security and robustness of the contracts.

Benefits: - Security Assurance: A thorough audit process minimizes the risk of bugs and vulnerabilities. - Reliability: Testnet trials under varied conditions ensure the system's resilience.

How it Works and Uses Stellar/Soroban: - Testnet Testing: Tests the smart contracts on the Soroban testnet, which simulates the live environment without risking real funds. - Security Audits: Independent audits assess the smart contracts' security, ensuring they adhere to best practices and are ready for mainnet deployment.

Governance and Multi-Asset Pool Expansion: (Phase 3)

Product Description: The final stage will also see the plan for transition to a DAO for decentralized governance and the introduction of multi-asset pools to the CDP system.

Problem and Solution: Centralized governance is often seen as a bottleneck for innovation and community involvement. Transitioning to a DAO democratizes decision-making and ownership. Multi-asset pools will diversify the assets within the DeFi ecosystem.

Benefits: - Decentralized Control: A DAO structure ensures the community drives the CDP system's evolution. - Diversification: Multi-asset pools offer users more options to engage with the system, increasing its robustness and appeal.

How it Works and Uses Stellar/Soroban: - DAO: Implements governance smart contracts on Soroban, allowing token holders to propose and vote on changes. - Multi-Asset Pools: Extends the CDP system's capabilities on Soroban to accommodate various assets, enriching the Stellar DeFi landscape.