Frequently Asked Questions
ESC uses an elastic supply mechanic. As market demand for ESC increases, the price of ESC increases above the 1 CRO peg, which causes new ESC to be minted. This increases the supply of ESC, returning the price of ESC to the peg. There are several ways newly minted ESC are distributed. In the event of supply extension, 40% of the newly minted ESC will return to ESC holders that have bonded their ESC inside the DAO and Liquidity Providers/Oracle, 10% will go to DiamondRoom, 20% will go to DAO Fund, 15% will be allocated to SAFE Fund, and remaining 10% will be distributed to Development/Marketing Fund. Lastly, ESC features a built-in debt market that handles supply contraction phases (ESC price ≤ 0.97 CRO). Once the debt has been created, ESC token holders can burn their ESC to acquire Coupons. Coupons will be redeemable for newly minted ESC during a supply expansion event. When burning ESC for Coupons, there is always a discount applied depending on the debt ratio.
Important to note is that the supply of ESC changes through the voluntary actions of users. Your wallet balance will never increase or decrease without your volition.
This is our mission. ESC combines the strengths of different stablecoin projects that came before it. By utilizing the knowledge and experiences of former stablecoin designs, ESC precedes to improve various factors, e.g. capital efficiency, stabilizing requirements, and governance. For ESC to become a sustainable and useful stablecoin, we aim for integrations with all sorts of DeFi applications, most importantly lending and borrowing platforms and exchanges.
An epoch defines a period within the ESC ecosystem in which the total supply of ESC is being adjusted. 1 epoch equals 6 hours, 4x daily. Within the epoch, the token price will be measured in order to decide if a supply extension or supply contraction is necessary. It also allows governance proposals to be raised and voted on by token participants.
When the total token supply contracts, the DAO incentivizes users to voluntarily burn their ESC for Coupons at a discounted ESC rate depending on the debt ratio. In the event of supply extension, Coupon holders will be able to redeem their Coupons for ESC. Coupons expire after 1460 epochs = 365 days.
Bonding enables you to participate in supply extension and allows voting on proposals concerning ESC’s DAO. Users can stage ESC into the DAO, which can then be bonded. Also, they can bond their LP tokens and earn rewards by providing liquidity. This prevents manipulations and flashes loan attacks during supply expansion and contraction events. Token holders with bonded ESC can vote on DAO governance proposals.
Epochs advance every 6 hours. They are advanced manually by a user. This allows the DAO to apply state transformations like Coupon expiry and supply regulation on advancement. To incentivize this behavior, the DAO mints reward ESC tokens to the sender upon successful advancement. As a new user, it is unnecessary to concern yourself with this technical detail.
Rewards can only be granted during token supply expansion events. If a supply contraction event occurs or no event takes place, then no rewards can be granted. Supply expansion events occur when the price of ESC rises above 1 CRO, which causes the minting of enough new tokens to return the price back to the peg, as well as clearing all remaining debt. The newly minted ESC is used to redeem all Coupons held by users. Once the Coupons are redeemed and the debt is cleared, bonded token holders and Liquidity Providers will be rewarded with the newly minted ESC.
The DAO determines the token price of ESC through the time-weighted average price (TWAP) algorithm. TWAP is measured and weighed over the course of 1 epoch, 6 hours. If the price changes drastically in the final minute of the epoch, it won’t have an outsized impact on the TWAP since for the majority of the 6 hours the price remained steady. You can estimate the chances of a supply extension event and the amount of rewards possible by doing the appropriate calculations. We encourage savvy, enthusiastic ESC community members to automate this process and share the information with the community.
The easiest way to help maintain the peg is by bonding ESC, providing liquidity to the Liquidity Pool, or doing both. Optionally, ESC holders can take part in the Coupon market.
If you just buy ESC it has the same reward opportunities as USDT or USDC. You can buy ESC below the peg and sell it at or above the peg, gaining the difference. Passively holding ESC without bonding them in the DAO does not earn rewards.
ESC provides four active methods to generate rewards for token holders. All require holding ESC:
- Bond your ESC into DAO
- Provide liquidity to the Liquidity Pool, then bond the LP tokens
- Purchase Coupons on the DAO’s debt market and redeem them during a supply expansion event. Always remember that coupons expire after 365 days = 1460 epochs
- Stake your tokens in FairRoom.
The answer will depend on the particular market conditions of the current epoch. The relative reward to bonding on the DAO and providing liquidity in the Liquidity Pool vary over time. In the case of supply extensions after successful Coupon redemptions, 40% of the newly minted tokens will reward token holders and the liquidity providers. Depending on the total amount of liquidity in the Liquidity Pool, those rewards can strongly vary. Besides token rewards, Liquidity Providers will also earn fees for all transactions that are facilitated through the Liquidity Pool.
It is possible to calculate the relative rewards for the current epoch. We encourage community members to do so and share with others.
Rewards that you earn from your bonded ESC are automatically bonded. Your bonded rewards will continue to compound automatically. If you wish to sell ESC, first unbond them. After 28 epochs (7 days) you will return to the available state, where you can withdraw all your bonded ESC and rewarded ESC.
Your rewarded tokens from providing liquidity to the Liquidity Pool will appear on the LP Reward Pool page of the Liquidity under the "Rewarded" header. Unlike bonded rewards, LP rewards do not automatically generate any further rewards.
If you wish to add your rewards to the liquidity you are already providing in the Liquidity Pool, you can do it easily with one click. On the bottom of the LP Reward Pool page, you see a “Provide” section. It will also display your WCRO balance in your connected wallet. You can enter a number from your awarded tokens (or click Max) into the box, and if you have sufficient WCRO to contribute the necessary proportion demanded by the pool at that time, you will trigger a transaction by clicking provide that will take your rewarded ESC, and the appropriate amount of WCRO, add it to the pool, and bond the LP token you receive in return to the Liquidity.