- Please read our previous IRON Stablecoin design article
- Launch on Wednesday, 25 August 2021 @ 9AM UTC
- Kick-off parameters revealed
- “How-to-mint” infographic included
We must build a stable stablecoin, one that retains it’s properties and attractiveness in the long-term and is strongly integrated with other Iron Finance products.
In our first article, we focused on presenting the stablecoin design. In this article, we will cover kick-off parameters and tokenomics in more detail.
1️⃣ IRON SUPPLY CAP
IRON will have a supply cap of 50M at launch and will be increased as we grow. Implications and lessons learned:
▶ A cap prevents IRON supply to overinflate unnecessarily
▶ Better control over IRON supply, and supply growth, minimizes unnecessary supply volatility
▶ Since ICE is required to mint IRON, stability of IRON supply also prevents both positive and negative demand shocks for ICE in the short term.
2️⃣ INTEGRATION with ICE TOKEN
As previously stated, ICE as collateral will be required when users want to mint IRON. In order to prevent excessive demand and volatility for ICE at launch, we will kick off with a 5% required ratio of ICE collateral and increase towards 10%.
▶ A gradual increase of required ICE collateral from 5% to 10% results in an increasing demand pressure on ICE without unnecessary demand shocks at launch
▶ We will decide together with our Governance on the timespan of growing the ratio from 5% to 10%
▶ The IronLend Collateral Ratio (CR) for ICE stays at 20%, as before
3️⃣ IRON Stablecoin Pools and Farms
▶ We are kicking off with an IRON+3pool LP at app.iron.finance/swap/pools (deposits will be live shortly)
IMPORTANT: There are no changes to current IS3USD LP (that’s the main, big USDC+USDT+DAI IronSwap pool) whatsoever! The IS3USD LP pool will continue to operate and receive rewards as is. In other words, users who do NOT wish to gain exposure to the IRON stablecoin can stay in IS3USD LP and enjoy the existing benefits. Once IRON supply stabilizes, we will consider to blend IS3USD LP and IRON+3pool LP into IS4USD LP. This will most likely happen in Q4 via IronDAO decision.
▶ The IRON+3pool LP will receive 200k ICE incentives per day. As with IS3USD LP currently, simply deposit your LP token at app.iron.finance/farms (live at launch)
▶ More IRON liquidity pools will come within a week. We have the following 2 pools and farms on our mind currently:
We are already discussing with partner projects about liquidity incentives (farms, vaults) for these pools. Expect an update over the next days.
4️⃣Target APR for IRON stablecoin pools
Having control over IRON supply, allows us to set a target APR rate for IRON pools. In fact, setting a cap on IRON supply effectively requires less ICE to maintain APR on IRON farms. Why? If IRON supply would not be capped, constant increase of IRON supply would keep on reducing APR in farms as more supply joins in. This would in turn require more ICE rewards (=more ICE inflation) to maintain an attractive APR for IRON farms. After all, it’s a balancing act.
▶If IRON supply cap of 50M is reached and all IRON is deposited in the farm, at $0.5 per ICE and 200k ICE incentives the farm APR will be close to 40%, or 49% APY when auto-compounding.
5️⃣ “How-to-Mint” example
▶ Deposit your assets to app.iron.finance/lending
▶ Make sure to check IronLend Collateral Factors in our docs
▶ Mint IRON on IronLend. Alternatively, users can buy IRON at IronSwap
▶ Deposit IRON in IronSwap pool at app.iron.finance/swap/pools
▶ Deposit LP token at app.iron.finance/farms to earn ICE incentives
▶ Hint: When depositing assets on IronLend, you also earn ICE 😉
Thank you for reading and make sure to join us on Discord!