Contest dates
- Submission period: 15 December 2020 (00:00:00 UTC) - 11 January 2021 (23:59:59)
General description
The goal of this contest is to work out possible architectures, design approaches, and technological stack for implementation of decentralized exchange (DEX) on top of free ton blockchain and infrastructure.
Let’s agree on a common definition:
Stablecoins are cryptocurrencies designed to minimize the volatility of the price of the stablecoin, relative to some “stable” asset or basket of assets or other index. A stablecoin can be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities (such as precious metals or any other stability-providing price index). Stablecoins redeemable in currency, commodities, or fiat money are said to be backed, whereas those tied to an algorithm are referred to as seigniorage-style.
Simplifying this definition above we can say that there are 3 main types of StableCoins:
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(Type #1) StableCoin is fully backed by reserves in national (fiat) currency (gold or other precious metals). For example, Tether (USDT) is pegged to $ 1 due to its full backing of local currency reserves.
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(Type #2) StableCoin - Backed by other cryptocurrencies (seigniorage-style). Dai (DAI), for example, is backed by cryptocurrencies such as ether (ETH). Its cost is pegged to $ 1 dollar through protocols that are governed by voting by DAO members and smart contracts. DAI is a decentralized stablecoin backed by cryptocurrencies.
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(Type #3) Non-backed algorithmic stabilization The contestants can offer such a token / function (Smart contract (s)), which will be stable in relation to something outside the TON blockchain and the contestants will give some kind of guarantee that using this token / function you can get an asset that will be stable in relation to some kind of external factor. Or in other words:
A change in supply and/or demand of TON token will somehow be pegged to external change of the price this token reflects, therefore to maintain stability, any changes outside or inside has to be balanced out.
Since Free TON is a completely decentralized project, we are committed to creating decentralized solutions.
All tools developed prior to the contest on the Free TON network can be fully utilized for the purpose of this contest (e.g. Atomic swaps, Free TON Bridges, Free TON DEXes etc).
Deliverable of the contest is a technical paper with a description of the proposed architecture. Images, diagrams, and illustrations are nice to have. A good economic model is a huge plus as well.
Motivation
Cryptocurrency rates are extremely volatile. To mitigate this volatility, stablecoins were created pegged to various stable assets. Stablecoins help users hedge against cryptocurrency volatility and are designed to act as a reliable medium of exchange. Stablecoins have quickly evolved into a powerful DeFi component that plays a key role in this modular ecosystem.
The Free TON blockchain also needs stable tokens created for Free TON and on the Free TON.
It is worth not forgetting that in the real world there are other types of assets, linking to which may be advisable. The Contest is not limited to creating a “1 USD StableCoin”, but it welcomes other forms of stabilization. Maybe a banknote of 1000 USD, euros, a barrel of oil, and a consumer basket, or just gold or other precious metals.
General contest requirements
Your submission should include:
- The basic economic model and description of money (Сryptocurrency\ Fiat\ Аssets\ StableCoins) flow in the system
- The general technical architecture of the solution including all of the features listed below in the hard evaluation criteria section along with the proposedStableCoin customer journey
- Name and contact information of the contestant for communication (Telegram username, e-mail)
Your work and the proposed solution must be:
- Original. It should not include more than 10% of other contestants’ works;
- Implementable. Keep in mind the peculiarities and goals of FreeTON;
- Consistent. Its elements should not contradict each other and the FreeTON Declaration of Decentralization;
- Safe. It must ensure a due level of funds security;
- Modern. Inspire by the leading market solutions.
Evaluation criteria and winning conditions
Hard criteria
- A good economic model for StableCoin mechanism (StableCoins purchasing \ borrowing \ Saving \ CDP creating)
- A sound technical description and/or diagram of how the stablecoin creation and operation
- Governance mechanism for managing StableCoin parameters, even if such a mechanism is added at secondary stages of implementation, should be described (this should not be mandatory as there may be protocols that will work without such a mechanism)
- When describing the first type of StableCoin (Type #1), the emphasis should be on legal issues. The contestant must be a bank or financial institution that has the rights and licenses to carry out such financial activities, or have legally validated agreements with those institutions OR prove in another verifiable way that it is possible to execute such a proposed solution in practice.
Artifacts
- PDF with the technical paper
Soft criteria
- Support for non-custodial purchase of StableCoins \ Saving \ CDP (Collateralized Debt Position) creating in the FreeTON network. If this is correct for your implementation.
- Readiness to participate in the implementation of the solution in the next stage
- Scalability potential for adding new types of StableCoins
- Maximum utilization of the FreeTON network advantages such as speed and sharding
- Your position on existing StableCoin problems (see “Existing StableCoin problems to be aware of” section below) and how they are tackled in the proposed architecture
- Detailed and easily understandable charts explaining the architecture and business processes
- Detailed technical specification of the proposed implementation with the justification of the selected approach: smart contracts, integration layer, interfaces
- Brevity
- Mostly everyday English to facilitate understanding
Existing StableCoins problems to be aware of
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When creating a StableCoin pegged to fiat currency (Type #1), the owner of such StableCoin becomes dependent on centralized institutions and must trust the issuer of such StableCoin
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StableCoin (type #2) backed by cryptocurrency, due to the volatility of such, is essentially “backed” only within certain volatility limits. It is not difficult to calculate mathematically that if this threshold is exceeded, when the rate of the backing cryptocurrency drops dramatically, the backing position must either be liquidated or re-backed, otherwise the StableCoin rate will also begin to change.
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Everyone knows the fact that any fiat currency is also subject to inflation, including the dollar, to which most StableCoins are tied. It would be an innovative approach to develop a more stable asset in terms of volatility than even the dollar.
Rewards
| Place | Reward, TON |
|---|---|
| 1 | 50,000 |
| 2 | 30,000 |
| 3 | 15,000 |
| 4 | 10,000 |
| 5 | 7,000 |
| 6-10 | 5,000 |
Voting
- Jury must be proficient in economic theory, algorithms and cryptocurrency design patterns. We do not expect Jury that does not possess all of these qualifications to Vote. We do not expect Jury to abstain either. You either vote for every submission or not vote at all.
- Jury members who vote in this contest must have a solid understanding of the technology. Those jurors who don’t, should not vote or choose “Abstain.”
- Jurors whose team(s) intend to participate in this contest by providing submissions lose their right to vote in this contest.
- Each juror will vote by rating each submission on a scale of 1 to 10 or can choose to reject it if it does not meet requirements or choose to abstain from voting if they feel unqualified to judge.
- Jurors will provide feedback on your submissions.
- The Jury will reject duplicate, sub-par, incomplete, or inappropriate submissions.
- A submission that scored an average score of less than 4 points according to the jury is considered insufficiently competent and did not pass the competition. Thus, it makes no sense to submit a work that does not bring anything innovative and only formally fulfills the conditions of the competition. This Submission is equal to “Reject”
- Specifically for Submission in DeFi Contests - Submission to receive the prize must receive 50% of the votes + 1 jury member. If it does not exceed this threshold, it is “Reject”.
Jury rewards
An amount equal to 5% of the prize fund will be divided equitably between all jurors who vote and provide feedback based on their votes’ quantity and quality. Both voting and feedback are mandatory to collect this reward.
Governance rewards
An amount equal to 2% of the prize fund will be divided equitably between all governance members.
Procedural reminders to all contestants
- Accessibility. All submissions must be accessible for the Jury to open and view, so please double-check your submission. If the submission is inaccessible or does not fit the criteria described, jurors may reject the submission.
- Timing. Contestants must submit their work before the closing of the filing of applications. If not submitted on time, the submission will not count.
- Contact information. All submissions must contain the contestant’s contact information, preferably a Telegram username by which jurors can verify that the submission belongs to the individual who submitted it. If not, jurors may reject your submission.
- Content. The content published in the forum and the provided PDF file should not differ, except for formatting. Otherwise, jurors may reject the submission. Attention, the content published on the forum must contain a link to a google document with access “for comment” for the Jury to ask questions about the text.
- Well-formed links. If your submission has links to the work performed, the content of those links must have the contestant’s contact details, preferably a Telegram username, or backlink to your submission at the FreeTON forum, so jurors can match it and verify to whom the work belongs. If not, jurors may reject your submission.
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Multiple submissions.
- Each contestant has the right to provide several submissions if they contain different approaches to the contest problem’s solving. However, if works are not unique enough or differ just in insignificant details, jurors may reject such repeating submissions.
- If the contestant wants to make an additional submission that overrides the one previously published, he must inform the Jury about this fact and indicate the correct revision to assess. In this case, only the indicated work will count. If the contestant hasn’t indicated the updated submission as the correct one, only the first one will count, the Jury will reject all the others.
Disclaimer
Anyone can participate, but Free TON cannot distribute Tons to US citizens or US entities
