Once-in-a-blue-moon the world of DeFi births something truly special. A new era in DeFi has dawned, and at the heart of it is a one-of-a-kind stablecoin called USDB.
USDB is a fully decentralized, low-risk stable asset backed by a basket of REAL assets that bridges the world of traditional finance and decentralized finance (DeFi) like never before. This new stablecoin takes the utility and interest earning opportunities of normal stablecoins to a whole new level, opening up APYs of up to 32.5%, no questions asked. Pique your interest? We thought it might.
Today we’re going to learn what USDB is and how you as an investor can make the most of it. This article is for everyone from crypto newbies to DeFi veterans, but we dive in, here’s a sneak preview of what you can expect from DeFi’s latest & greatest stablecoin.
- A safe haven for investors to put their capital during times of volatility
- Unprecedented interest earning opportunities (up to 32.5% APY low-risk)
- A seamless UI and bridge between the world of DeFi and TradFi
- A highly liquid, truly decentralized solution to the ‘stablecoin dilemma’ that is available on several chains including ETH, FTM, AVAX, BSC and many more
- A stable, low-risk asset backed by REAL assets (unlike the US dollar)
- A number of exciting use-cases to be announced, including HUGE yield farming opportunities, liquidity solutions for businesses and groundbreaking NFT compatibility (more on this soon)
In short, USDB is not your average stablecoin. Both DeFi and TradFi have been waiting a long time for a stablecoin that does it all. And it’s finally here. If earning 32.5% APY on a stable asset and any of the above has you curious, keep reading.
In simple language, we’re going to break down how USDB works and how you as an early adopter can make the most of the stablecoin revolution.
DeFi at a glance
For those new to crypto and DeFi, here’s a quick rundown to get you up to speed. (Seasoned DeFi vets can skip ahead).
Decentralized finance is the next great leap in the evolution of finance. It’s at the heart of the crypto movement and shows no signs of stopping. The Total value locked inside the DeFi industry increased from $21.1B to $260B, 1,100% growth in 2021, a figure which is only expected to climb as institutional and retail investment grows.
Currently, 55 of the top 100 banks by assets under management have invested in blockchain companies, and 81 of the top 100 companies by market cap are now using blockchain technology. On top of that, some of the world’s biggest global brands like PayPal, Tesla, Mastercard, Visa, Venmo, Google and Samsung have opened their doors to crypto, pouring billions of dollars of their own money into the industry.
The crypto revolution is happening, and the main reason for that is because of the new possibilities that DeFi’s innovative financial products like USDB are bringing about.
But what is DeFi?
In its simplest terms, DeFi recreates financial services like insurance, loans & interest accounts on blockchain networks outside the control of banks, governments & companies.
Thanks to blockchain technology and smart contracts, for the first time, people who have never met can do business with one another in a completely trustworthy manner. This opens up a world of new possibilities, investment and interest earning opportunities, lending/borrowing options and much more.
All around the world, people are waking up to the exciting possibilities of decentralized finance, and with billions of dollars pouring into the space, the next decade will see a seismic shift in the way people engage with financial services. If you’re only hearing about USDB and stablecoins coins, get used to it. They’re not going away anytime soon.
DeFi & Stablecoins
One of the big reasons DeFi has seen such astronomical growth in the past few years is due to an invention called the stablecoin. Stablecoins are, in many ways, the bridge between traditional finance and decentralized finance and cryptocurrency.
Stablecoins are a type of cryptocurrency that is ‘pegged’ to a real-world asset like fiat currency or precious metals. This ‘peg’, usually attached to $1 USD, provides a stable asset for the crypto ecosystem, removing the pesky volatility that comes with other non-stablecoin cryptocurrencies. Cool, right? Not so fast.
For the most part stablecoins like Tether’s USDT have relied on the stability of fiat currency to maintain a stable value. But there’s a problem with this. Contrary to popular belief, stablecoins are actually far less ‘stable’ than they’re made out to be.
The dollar is controlled by the US government and the Federal Reserve. This means a depreciation of the dollar also means a depreciation of these stablecoins, which is not ideal given they are supposed to be a ‘stable currency’.
Furthermore, stablecoins are in many ways ‘centralized’ as they are owned and issued by a centralized company, like Tether, who we rely on to keep a 1:1 backing of every stablecoin issued in their reserve. This opens them up to a number of risks as there is a lot of trust being put in the company issuing them, which is why a number of decentralized stablecoins like LUNA’s UST have taken off. Still, stables like UST have their flaws and the interest you can earn off UST is nothing to write home about, and it’s never been like us to settle for ‘good enough’. And so we didn’t.
Enter the USDB Stablecoin
USDB is the first decentralized, stable, low-risk asset backed by a basket of real assets. The primary function of USDB is to provide a safe, stable place to park returns during waiting periods while allowing holders of USDB to earn incredible rates of passive income. No inflation, no volatility, no surprises and 100% decentralized.
With USDB, holders can park their assets safely and on multiple chains during times of volatility while earning up to 32.5% APY on their holdings. And that’s just the tip of the iceberg. The stablecoin revolution has arrived.
We will now go on to explain the nuts and bolts of USDB and the opportunities that come with it, but rest assured, for the average user, USDB can remain as simple as a stable asset that allows you to earn crazy high APYs while you keep your funds safe.
USDB has been specifically designed with simplicity in mind so it can be used by investors of all backgrounds, without needing to understand all the technical details. That being said, in crypto, knowledge is power, so here’s how it all works:
USDB is ‘backed’ by a rebase token called FHM – however, the term ‘backed’ is somewhat misleading. In reality, an FHM token is burnt (destroyed) in order to create USDB tokens, which acts as a sort of receipt that guarantees a set value of 1 USD backed by the FHM protocol’s treasury of assets. This is done through the proof of burn mechanism.
USDB originated from a revolutionary stablecoin called FHUD which introduced the proof of burn consensus mechanism to the world. This novel mechanism ensured that an asset could maintain its peg and not be double spent.
While FHUD served its purpose initially, it needed to be modified and reworked if it was going to live up to its full potential of a stablecoin. After countless late nights tinkering away, our team of dedicated and experienced developers, financial strategists and DeFi junkies came up with an ingenious way to create the perfect stablecoin – USDB. But before we get ahead of ourselves, how exactly does proof of burn work?
Proof of burn
Proof of burn is a consensus mechanism that ensures there will be no double spending of an asset. Once an FHM token is burned, the value (at the time of burn) is locked and recorded on-chain. That means burning an amount of FHM from the DAO operating account would mint the same dollar value in USDB. $1 in FHM to $1 USDB.
Example: Say we need to unlock 1 million dollars worth of FHM. We would burn 1-million-dollar worth of FHM (the amount of FHM will depend on the current market price), while minting 1 million USDB tokens. This gives 1 USDB a value of $1. The intrinsic value will remain equivalent to 1 million dollars in FHM as that is how much was burnt/minted at a specific time.
You can think of USDB as a kind of receipt that guarantees a value of $1. By keeping this in the treasury it effectively frees up the existing stablecoins to be used for immediate use, as opposed to being idle in the treasury.
How does USDB maintain its peg?
When USDB rises above $1 in value, a bond is offered to purchase USDB with DAI at a $1 per USDB valuation instantly. DAI is then deposited to FHM’s treasury and investors get USDB that can then be swapped for other stables or assets in a DEX.
Here’s how you can benefit from this:
-When the USDB peg moves it presents arbitrage opportunities.
-When the price goes above $1 then users have the opportuinity to get DAI at a a discounted rate
– When the price goes below $1 users can buy USDB with DAI and bond this USDB to get FHM at a huge discount
What can you do with USDB Stablecoin?
Now this is where it gets really exciting. While the use-cases of USDB and its grand plans to revolutionize the NFT industry in particular will be released as the project develops, there are a number of cool things you can do with USDB today.
TradFi bonds – 32.5% APY
We are incredibly excited to present TradFi bonds, a new investment product catering to not only large investors holding a significant amount of crypto assets, but also investors that are here to stay long-term and seek passive income that is stable, reliable, and guaranteed.
TradFi bonds function as typical bonding mechanisms but with both reliable and stable returns after the expiration of the vesting period. Due to their underlying nature, we believe TradFi bonds are suitable for long-term, savvy investors to safely park their funds and earn yields, as well as large asset holders to earn additional income.
There are two flavors of TradFi Bonds.
- Bonds with 15% returns in $USDB (32.5% APY), with a vesting period of 6 months
- Bonds with 5% returns in $USDB (21.5% APY), with a vesting period of 3 months
Investors can lock in their DAI on Ethereum or Fantom in TradFi bonds for either 3 or 6 months. On the expiration of the vesting period investors simply claim their rewards.
Example 1: Bond 100 DAI for 6 months and receive 115 USDB. 15% rewards.
Example 2: Bond 100 DAI for 3 months and receive 105 USDB 5% rewards.
And, if the investors do not own enough stablecoins to lock in TradFi bonds, our recently introduced DEX can facilitate bridging and swapping coins and tokens, including $BTC and $ETH, to stables with the best conversion rates and routes.
We have strong provisions in place to maintain stability and yields for our investors. We have also taken steps to mitigate against unethical behaviors of market manipulation affecting our investors negatively. In case of an unforeseeable circumstance where an investor cancels their bonds before the vesting period expires, all the rewards will be forfeited and the investor will receive 95% of their original investment in $USDB.
Single Sided Staking
Through Single Sided Staking, simply deposit DAI and you’ll get back 20% extra per year in FHM tokens. Simple as that. Single Sided Staking is similar to Liquidity Pair (LP) farming while eliminating the impermanent losses. Instead of depositing both tokens of an LP to farm and earn rewards, investors only provide $DAI tokens, i.e., one side of the pair while our protocol deposits the other token of the liquidity pair which is $USDB. This pair is then farmed to earn rewards continuously.
Here’s how it works:
After the deposit of $DAI, our smart contracts perform a number of steps highlighted below –
- The deposited $DAI goes through our bonding contract to burn the equivalently valued $FHM tokens and mint equally valued $USDB tokens. The burning of our native token $FHM to mint our stablecoin $USDB is basically a Proof-Of-Burn mechanism that helps deflate the $FHM supply.
- In Beets.fi, our smart contracts deposit the pair of newly added $DAI with minted $USDB into our community pool conveniently called “A DAI-Abolical Balance”.
- Our protocol then rewards the investors participating in Single Sided Staking and depositing their $DAI with 20% APR rewards in our native token $FHM – with low risk to the initial capital.
- Investors can claim their rewarded $FHM tokens anytime they prefer, just like with the traditional LP farms.
- Investors can also withdraw their initial investments from the Single Sided Staking system which will essentially prompt the removal of the pair from Beets.fi and burning of the $USDB initially minted in the process (see point 1.).
- To circumvent impermanent loss users will be able to claim back any impermanent losses incurred, paid out in FHM.
To be eligible for this rebate. users need to:
- Incur impermanent loss. i.e USDB has devaluated since the initial investment.
- Have been staking for at least 24 hrs
- Withdraw the full amount or last part of the amount that was invested. To the last decimal
Let’s assume an investor deposits 100 $DAI in Single Sided Staking system and the value of the $FHM token is $10.
At that instance, 100 $USDB tokens will be minted by burning equivalently valued $FHM tokens.
Since $FHM is worth $10, 10 $FHM tokens will be burned.
These 100 $DAI and 100 $USDB tokens will form a liquidity pair and become part of our community pool in Beets.fi. Our protocol will then continuously reward the investor with $FHM tokens at a rate of 20% APR.
Note that investors can claim rewards anytime they prefer and need not wait for one full year to pass!
For many newcomers to the space, using DEXes and different bridges can be complicated. USDB is meant to be the bridge between the world of TradFi and DeFi, so we wanted to make it as easy as possible to swap, bridge and bond at the absolute cheapest prices. For many newcomers to the space, using DEXes and different bridges can be complicated. Fortunately, we now have a fully functional MultiChain Swap and DEX aggregator that takes care of all this work for you.
Bridging, swapping and bonding just got a whole lot easier. AND cheaper. In the past we had to rely on conversion rates and liquidity from just one DEX. Choosing that DEX could be tricky as well with such varying rates across DEXes. We also usually needed to begin by bridging tokens from Binance or Ethereum to Fantom, which added another layer of complication.
Wouldn’t it be better to aggregate all the DEX liquidity and find the best-offered conversion price available in the entire crypto ecosystem and not just one DEX? And wouldn’t it be wonderful if the bridging, aggregating, swapping and bonding process could be done AUTOMATICALLY for us and all on one SINGLE website?
Well now it can. FantOHM.com solves all these problems and much more. We understand that aggregated deep liquidity, optimal conversion rates, and seamless user experience are better than just reinventing a new DEX by ourselves, so through a partnership with Rango Exchange, we are able to offer exactly this.
Our Dex is perfect for USDB and FHM holders, but also for virtually anyone in crypto. The rest of the crypto ecosystem and anyone using the Binance, Ethereum or Fantom networks will now be able to cheaply and seamlessly perform a wide range of otherwise time-consuming transactions in one convenient location, saving you money and valuable time (which often causes investors to lose out on opportunities during times of volatility).
Wrap up on USDB Stablecoin
Stablecoins have finally got the makeover they’ve needed for a long time. With USDB, stablecoins are as exciting as ever before, with HUGE opportunities for low-risk gains on the table. And the best is yet to come.
In the coming weeks, we’ll be releasing a lot more exciting news around USDB, NFTs and a couple of other big partnerships in the works. To learn more about FHM and USDB stay tuned. If you’re here now, you’re very early. Strap in. We’re glad to have you with us for the ride.