FAQ
Frequently-Asked-Questions
Last updated
Frequently-Asked-Questions
Last updated
No, VNTR is not a stable coin. Rather, VNTR aspires to become an algorithmic reserve currency backed by other decentralized assets. Similar to the idea of the gold standard, VNTR provides free floating value its users can always fall back on, simply because of the fractional treasury reserves VNTR draws its intrinsic value from.
Each VNTR is backed by the underlying assets in treasury. Because the treasury backs every VNTR with at least 1 USDC, the protocol would buy back and burn VNTR when it trades below 1 USDC. This has the effect of pushing VNTR price back up to 1 USDC. VNTR could always trade above 1 USDC because there is no upper limit imposed by the protocol. (Pegged means it would be == 1. Backed means than it would be at least 1 or >= 1)
You might say that the VNTR intrinsic value is always equal to or greater than 1 USDC.
At a high level, VNTR DAO consists of its protocol managed treasury, protocol owned liquidity, bond mechanism (bonding), and high staking rewards that are designed to control supply expansion.
Bond sales generate profit for the protocol, and the treasury uses the profit to mint VNTR and distribute them to stakers. With liquidity bonds (LP Bonds), the protocol is able to accumulate its own liquidity to ensure stability.
(3,3) is the idea that, if everyone cooperated in VNTR DAO, it would generate the greatest gain for everyone (from a game theory standpoint). Currently, there are three actions a user can take:
Staking (+2)
Bonding (+1)
Selling (-2)
Staking and bonding are considered beneficial to the protocol, while selling is considered detrimental. Staking and selling will also cause a price move, while bonding does not (we consider buying VNTR from the market as a prerequisite of staking, thus causing a price move). If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1).
If we both stake (3, 3), it is the best thing for both of us and the protocol (3 + 3 = 6).
If one of us stakes and the other one bonds, it is also great because staking takes VNTR off the market and put it into the protocol, while bonding provides liquidity and USDC for the treasury (3 + 1 = 4).
When one of us sells, it diminishes the effort of the other one who stakes or bonds (1 - 1 = 0).
When we both sell, it creates the worst outcome for both of us and the protocol (-3 - 3 = -6).
As the protocol controls the funds in its treasury, VNTR can only be minted or burned by the protocol. This also guarantees that the protocol can always back 1 VNTR with 1 USDC. You can easily define the risk of your investment because you can be confident that the protocol will indefinitely buy VNTR below 1 USDC with the treasury assets until no one is left to sell. You can't trust the FED but you can trust the code.
As the protocol accumulates more PCV (Protocol Controlled Value), more runway is guaranteed for the stakers. This means the stakers can be confident that the current staking APY can be sustained for a longer term because more funds are available in the treasury.
It is extremely important to understand how early in development the VNTRDAO protocol is. A large amount of discussion has centered around the current price and expected a stable value moving forward. The reality is that these characteristics are not yet determined. VNTR could trade at a very high price because the market is ready to pay a hefty premium to capture a percentage of the current market capitalization. However, the price of VNTR could also drop to a large degree if the market sentiment turns bearish. We would expect significant price volatility during our growth phase so please do your own research as to whether this project suits your goals.
There is no clear answer to this, but the intrinsic value can be determined by the treasury performance. For example, if the treasury could guarantee to back every VNTR with 100 USDC, the intrinsic value will be 100 USDC. It can also be decided by the DAO. For example, if the DAO decides to raise the price floor of VNTR, its intrinsic value will rise accordingly.
