Understanding the TBCD and its Role in the SORA Ecosystem
Introducing TBCD: The Future of DeFi with SORA’s Innovative Token Bonding Curve offering stability, liquidity, and farming opportunities.
TL;DR
- The Token Bonding Curve Dollar (TBCD) is a SORA ecosystem stablecoin designed to operate seamlessly within the Token Bonding Curve (TBC).
- The TBC is an innovative smart contract that autonomously governs the supply of XOR tokens, sidestepping the boom-bust cycles standard in traditional economies and the deflationary patterns in many cryptocurrencies.
- TBCD is not just a stablecoin; it’s a vision for the future of DeFi, poised to become a cornerstone of the SORA ecosystem and the broader DeFi world by offering unparalleled stability, liquidity, and farming opportunities.
The Genesis of TBCD
Understanding the need for a TBCD begins with understanding the unique economy of the SORA ecosystem, how the Token Bonding Curve and Token Bonding Curve Dollar work, and the relationship between them will be explained in this article.
Why does the SORA ecosystem need a Token Bonding Curve:
- Economic Expansion: Funding goods and services for productive purposes is essential for the growth of the SORA economy.
- XOR Stability: Building reserves in ETH, DAI, VAL, PSWAP, XST, and TBCD in the token bonding curve support the stability of the XOR token.
- To back the value of the TBCD token.
How TBCD Supports the XOR Token:
- It is convertible to XOR.
- A reserve asset within the SORA token bonding curve.
- It is always valued at $1 by the token bonding curve.
- Capable of purchasing XOR from the TBC at the current market price + $1.
Decoding the Token Bonding Curve (TBC)
Having established the rationale behind TBCD, it’s essential to delve into the mechanism that underpins it: The Token Bonding Curve.
The Token Bonding Curve (TBC) is an innovative smart contract that autonomously governs the supply of XOR tokens. Its design aims to sidestep the boom-bust cycles standard in traditional economies and the deflationary patterns in many cryptocurrencies.
Core Aspects of the SORA TBC:
- Autonomous Management: The TBC serves as an on-chain, decentralized custodian for XOR. It can mint XOR tokens by accepting specific reserve assets and can burn XOR tokens, subsequently releasing the reserve assets. This means users can purchase newly minted XOR using certain reserve assets or sell their XOR tokens immediately burned in exchange for these assets.
- Supported Reserve Assets: The TBC is compatible with various reserve assets such as ETH, DAI, VAL, PSWAP, XST, TBCD, and BTC. These assets fill the TBC reserves, which back the value of the XOR token.
- Price Mechanisms: The TBC employs two primary functions to dictate XOR prices: Buy-Price and Sell-Price.
The Buy-Price function sets the XOR purchase rate.
- It mints XOR tokens upon purchase and channels the used currency into reserves.
XOR’s circulating supply determines the rate and follows the equation y=mx+b, where:
- b denotes the starting price and slope,
- m indicates a $1 increment for every 1337 XOR in circulation,
- y represents the prevailing XOR price from the token bonding curve.
The Sell-Price function establishes the XOR selling rate.
- It liquidates reserves to repurchase XOR, which is subsequently burned.
- XOR is repurchased at a rate 20% below the buy-price.
This is how the 20% differential is allocated:
- VAL buyback and burn: 1%
- Rewards for VAL holders: 9%
- Benefits for SORA citizens: 0.1%
- Incentives for retailers and consumers: 0.4%
- Funds for governance and development: 0.5%
- Resources for projects: 9%
For a deeper dive into the sell-price calculations, refer to this article.
- Supply-Price Relationship: The TBC’s pricing functions are designed to increase XOR prices as supply expands and decrease them when supply contracts. This establishes a direct correlation between XOR price and supply.
- Market Dynamics: On secondary markets like Polkaswap, Uniswap, and CEXs, XOR’s price is typically confined to a specific bracket. Trading XOR outside this bracket can lead to arbitrage opportunities, stabilizing XOR’s price fluctuations.
Advantages of the TBC:
- Adaptive Supply: The TBC adjusts XOR’s circulation to align with market demand, fostering consistent economic growth and price equilibrium.
- Guaranteed Liquidity: The TBC consistently holds ample buyback reserves, ensuring immediate and deep liquidity.
- Robust Security: XOR’s decentralized monetary framework safeguards against potential malpractices and guarantees transparency.
- Stable Economics: The SORA monetary model isn’t debt-driven. New tokens are democratically allocated, curbing the risk of volatile economic swings.
- Price Assurance: The TBC’s pricing functions serve as a buffer, offering a predictable price range for XOR.
TBCD: The Game-Changer
After understanding how the TBC works, we can explore the TBCD token’s unique features and role in revolutionizing the SORA ecosystem.
The Token Bonding Curve Dollar (TBCD) is an algorithmic, non-synthetic stablecoin that has its value maintained by the SORA token bonding curve
TBCD Main features:
- It can be converted to XOR.
- It serves as a reserve asset for the SORA token bonding curve.
- It is valued at $1 USD with full TBC reserves and less value when the TBC does not have full reserves.
- It is used to buy XOR from the TBC at the current market price plus $1.
Core TBCD Token Functions
How is TBCD Managed:
- Creation & Allocation: TBCD is exclusively created and allocated through on-chain governance. XOR token holders determine its supply, allowing TBCD to support SORA’s economy by funding builders. This leads to increased utility within the SORA ecosystem.
- Balancing XOR Supply: The increase in XOR supply is exclusively done by providing TBCD (as per the previous point) to the token bonding curve. This ensures that TBCD is a counterbalance for any XOR introduced into circulation.
What are the TBCD Pricing Dynamics:
- Relation to XOR Price: TBCD’s value fluctuates based on XOR’s price. When XOR’s price dips, TBCD might be valued below $1, but as XOR’s price rises, TBCD’s value nears $1.
- Encouraging Holding vs. Selling: If XOR’s price is significantly below its target (e.g., far from $600), TBCD’s value might drop (e.g., to $0.90). This pricing strategy encourages holders to either retain TBCD, anticipating a value increase, or to buy XOR directly, expecting its price to rise. Both actions aim to reduce XOR’s selling pressure when its price is low.
What is TBCD’s impact toward XOR’s Target Price?
- Adapting to Market Conditions: While XOR’s target price is around $600, thanks to filled TBC reserves, TBCD’s utility diminishes, especially if the secondary market price is significantly lower. To maintain TBCD’s relevance, it’s designed to purchase XOR from the TBC at the current market price plus an additional $1. However, when the TBC reserves are low, the price of TBCD is also much lower than the $1 price.
- Implications:
- If XOR’s market price is closer to its target (e.g., $100), buying it for $101 using TBCD is more appealing due to the negligible premium.
- When XOR matches its target price (around $600), TBCD can buy XOR at the exact market rate, eliminating the $1 premium.
Trading Dynamics
- Sell Price Consideration: When trading XOR for TBCD, the selling price of XOR will be 20% lower than its purchase price, aligning with the dynamics of other assets in the token bonding curve.
The Road Ahead for TBCD
To realize TBCD’s potential, the TBC reserves should be filled with the reserve assets to increase the XOR price. This means more transactions on the SORA network and clarification that when the TBCD minted to fund goods and services is swapped for XOR, this contributes to filling the TBC reserves.
TBCD’s Impact on the Cryptocurrency Market
Depending on SORA TBC reserves, TBCD offers users a dependable stablecoin pegged to the U.S. dollar’s value. The SORA token bonding curve further enhances TBCD’s liquidity, facilitating seamless transactions.
In Conclusion
The SORA Token Bonding Curve is a great tool to mitigate extreme market movements; however, for the TBC to execute, the reserves must be backed with strategic assets. Many transactions with high volumes on the SORA network support this requirement. Eventually, other networks adopting token bonding curves can benefit from assets such as the TBCD, as they directly reflect the network health and reserves.
TBCD is not just a stablecoin; it’s a vision for the future of DeFi. It’s poised to become a cornerstone of the SORA ecosystem and the broader DeFi world by offering unparalleled stability, liquidity, and farming opportunities.
