Coinversation Protocol is a synthetic asset issuance protocol and decentralised contract trading exchange based on the Polkadot contract chain. It uses the token CTO issued by Coinversation Protocol and Polkadot(DOT) as collateral, and synthesizes any cryptocurrencies or stocks, bonds, gold and any other off-chain assets through smart contracts and oracles. Users can forge a certain synthetic asset by collateralizing CTO or DOT, such as U.S. dollars, and automatically have a long position in the asset. Users can also convert minted assets into other assets through the trading platform, so as to realize the purpose of shorting the asset and longing other assets.
The assets minted by all the users correspond to the liabilities of the entire system, and the proportion of each user's liabilities has been determined at the time of forging, so that their respective profits can be calculated. Because such a collateral pool model does not require a counterparty, it perfectly solves the problems of liquidity and transaction depth in decentralised exchange(DEX).
Main Functional Modules of The Entire System
The synthetic assets issued by the entire system are all produced by users staking certain collateral. The initial collateral includes CTO and DOT.
At present, it is stipulated that the assets synthesized by direct staking of collateral are the stablecoin cUSD. That is, after users stake the CTO or DOT, the directly generated synthetic asset is cUSD, while other synthetic assets need to be converted by the user through contract trading in DEX. The price of cUSD is always defined as $1 throughout the system. All cUSD generated by all users is the total liability of the entire system, priced in cUSD.
It is an exchange that provides conversion of different synthetic assets and contract trading. Due to the design characteristics of CP, this DEX does not require a counterparty, and there is no issue of transaction depth.
The collateral pool is the sum of synthetic assets generated by all users, and is priced in cUSD. According to the amounts of synthetic assets generated by each user, the debt pool also records the proportion of each user's debt. Whenever a new synthetic asset is generated, the debt ratio of the system must be recalculated.
Users trading or converting synthetic assets on the DEX will incur transaction fees. The fee ratio is tentatively set at 0.3%, and these fees all enter the fee pool. The fee is collected in cUSD, and all the fees are distributed to users in proportion to the debt.
In the initial stage, the system will use the centralized oracles provided by the project team, and in the future, it will introduce more secure decentralized oracles.
The initial collateral includes CTO and DOT, and the collateralization ratio is 800% and 500% respectively. In the future, the collateral and collateralization ratio can be adjusted through community governance. When users stake collaterals and forge synthetic assets, corresponding debts are generated. When the user wants to unlock the collateral, he must repay the debt, that is, destroy the previously generated synthetic assets.
Determine the type of synthetic assets.
Determine the data source of synthetic assets and establish a whitelist mechanism
Realize data collection.
Complete the oracle function.
Forge synthetic assets by collateralizing CTO and DOT.
Realize the collateral pool function.
Realize the function of fee pool.
Realization of decentralized contract exchange.
Realize the functions of liquidity mining.
Introduce more secure decentralized oracles.
Perfect decentralized exchange.
Development of community governance.