[Short general description]: Alchemint is a decentralized price-stable cryptocurrency management system runs on the blockchain of NEO. It creates high performance application-level digital currency through distributed ledger technology. A series of risk control measures like the mortgage of digital assets, the release of stable digital currencies, the management of the market value of collateral are implemented by smart contracts to establish a resilient, open, transparent and stablecoin issuance system.
[Main problems tackled]: Alchemint is not controlled by any individuals or organizations. It does not need audit companies or regular publication of reserved assets. Everyone is able to check real time market value of collateral, the circulation of stable currencies and the overall condition of the system on the public blockchain. Alchemint has a complete set of risk control measures to manage the collateral’s market value so that the fluctuating will not trigger crisis of the whole system. Anyone can issue stablecoin by mortgaging value-fluctuated NEO assets (or any digital assets approved by Alchemint Governance Committee) like sdusd with the exchange rate of 1 on USD (the currency can be euro or RMB). Since the sdusd is created, it can be used to pay like any other cryptocurrency, remit, store of value or top up in digital assets exchange to purchase other fundamental currencies of digital assets.
[Main contribution proposal]:
1) Stablecoin SDUSD - sdusd is a cryptocurrency issued on the platform of Alchemint with the mortgage of neo and other digital assets. The price is relatively stable with the US dollars. Price is supported and stabilized by Smart Assets Reserve (SAR), commission lever and motivator from internal and external through Alchemint.
2) Smart Assets Reserve - SAR is the most important technical component in Alchemint. It is a smart contract based on NeoContract. With the support of SAR, Alchemint is able to guarantee the security, transparency and audit able of all mortgaged digital assets. Efficient management operation can be done when the market value of the mortgage fluctuates.
3) Target Price Stabilization Mechanism - The stablecoin sdusd inherits the advantages of digital currency and other digital assets that avoid huge fluctuation of currency’s value. It owes to the application of stabilization mechanism. Under this mechanism, the legal tender of sdusd, take USD as exam-ple, is set to the rate of 1:1 initially. They will gradually become soft anchoring afterwards. When the sdusd and USD come with deviations, the feedback mechanism will be triggered. This mechanism aims to stabilize the rate between sdusd and legal tender (USD) by adjusting the target price’s rate of change and incent the market to catch the chance of arbitrage.
4) Single-asset Mortgage Mechanism - During transitional period, Alchemint only accept neo as qualified mortgage assets. More categories of digital assets will be added as acceptable collateral.
5) Multiple Assets Mortgage - The collateral of Alchemint will expand to multiple digital assets in the future. Those include other digital currencies (btc, eth, e.g.), digitized “real world” assets. Sometimes it is two or more combination of those.
6) The Alchemist - an outside participant consists of individuals and automated program. The system has a penalty for forcible liquidation so that the alchemist will consistently looking for opportunities to find the SAR which need to be liquidated and repay its sdusd for comission.
7) Oracle - SAR needs a real time market price to evaluate the necesity of triggering the compulsory liquidation. Alchemint also needs real time market price of sdusd to detemine the adjustment of incentive mechanism. All these price are external market price that can not be positively sensed by blockchain.
Black Swan and coping mechanisms (although Alchemint has various risk control measures to safeguard the asset security of the stablecoin holders and the sustainable supply of the stablecoin, it is unavoidable that there are always uncertainties in the global financial markets and the impact of the Black Swan event always occurs. For the Alchemint system, we believe that the Black Swan incidents mainly come from two aspects. One is the sudden flashback of the collateral value which leads to Alchemint’s failure in executing measures for risk control as it is hard to cope with. The other one is the technical attack on the system platform) through:
a) Risk response that Market irrationality leads to a sharp devaluation of collateral - Alchemint sets a series of risk control management and Alchemists are willing to protect the system under the incentive mechanism
b) Forecasting mechanism of market - In order to maintain the confidence towards value of stablecoin, how to monitor and forecast the market to spread risk before the extreme events happen is an important measure, except completing enough risk control measures coping with extreme events.
c) Technical Failure or Under Attack - Alchemint is established on the foundation of Smart Contracts which may exist potential flaws and bugs. At early stage of the system, the greatest technical risks are malfunction caused by bugs and vicious technicians’ attack that target on code flaws.