Introduction to Stabilize Protocol

3 min readOct 18, 2021

Stabilize Protocol‌ (Defi 2.0)

Stabilize is a stable decentralized borrowing protocol 2.0 that allows you to draw interest-free loans against Crypto-Assets( basic asset & ibTKNs) used as collaterals. Stabilize will be launched on the Avalanche network first.

Stabilize Protocol is endorsed and licensed by the PolyQuity team, a fork of the Liquity protocol on the Polygon network, who have designed a new mechanism and economic model to upgrade the protocol to support multiple crypto-assets as collateral. PolyQuity has tens of millions of dollars TVL and a strong community presence.

‌We hope that Stabilize would become the fundamental financial infrastructure. With the growth of the Defi market, $SUSD might become one of the important decentralized assets.

Core Feature

Support multiple assets as collateral
Run in multiple chains
By staking Collaterals Assets, Stablecoins (U.TOKEN) of zero interest-fee is minted to improve capital utilization.
Minimum collateral ratio of 110% — more efficient usage of deposited Collaterals assets
Directly redeemable — U.TOKEN can be redeemed at face value for the underlying collateral at any time
Token ($SET) holders can earn U.TOKENS (Borrowing fee), Collaterals (Redemption fee) and $SET(Transfer fee).

Muti-asset Collateral

Basic Asset

ETH
AVAX
WBTC
Link
CRV
Any ERC20 token

Interest-Bearing Asset

Interest-bearing assets are assets that earn yield. Some examples are LP tokens, Yearn Vault Tokens, aTokens, cTokens, and more.

Currently, a lot of interest-bearing assets have locked in capital that can’t be put to further use. Stabilize Protocol offers an opportunity to use it.

Why does Stabilize Protocol use Interest-Bearing Assets as Collateral?

On Avalanche, there are already well-developed lending markets to borrow against base-level assets such as WETH or AVAX. But for many interest-bearing assets, there is no place to borrow against them and lever up in order to free up cash to improve returns or hedge your portfolio. Borrowers on Stabilize continue earning yields on their collateral while also now being able to lever up on these assets.

With decentralized borrowing, Stabilize will become a “liquidity black hole” as users drop in their entire portfolio of LP tokens, staked assets, and base level ERC-20 tokens.

U.Token

U.Token is minted by staking collateral via Stabilize Protocol on Avalanche Network. U.Token is the USD-pegged stablecoin used to pay out loans on the Stabilize protocol. At any time it can be redeemed against the underlying collateral at face value.

Stabilize USD ($SUSD)

Stabilize USD ($SUSD) is a stablecoin wrapped by any U.TOKEN. Since each U.TOKEN is independent, we need a unified stablecoin to meet the ease of use.

$SET

$SET is the secondary token issued by protocol. It captures the fee revenue that is generated by the system and incentivizes early adopters.

$SET Transfer Fee

Mechanism:

The token contract will charge the fee(1%) for each $SET transaction.

0.5% will be allocated to the $SET Staking Pool;
0.5% will be permanently burned.

Decentralized Frontend Operator

Stabilize will choose Liquity.Fi as our main front-end provider. They have customized a special front-end UI for Stabilize and will continue to update it for us. The Kickback rate is 99%.

Liquity.Fi is a well-known third-party frontend of Liquity protocol and Polyquity protocol. They have provided convenient and safe interactive services for more than hundreds of millions of funds.