BenFen Chain is a public blockchain developed using the Move language. Its most significant difference from other blockchains lies in using the stablecoin "BUSD" as its on-chain "first citizen." BUSD can be utilized for operations such as paying gas fees and staking, significantly enhancing BenFen's inclusivity and universality while lowering the learning curve for new users.

In addition, BUSD held by users on the BenFen Chain can be directly recharged into the OB Card, a credit card, for daily expenses. This includes purchasing overseas services (chatGPT/Netflix), fiat OTC transactions, etc. This feature substantially facilitates the flow of funds for users between on-chain and off-chain, domestic and international. The OB Card is set to be officially launched in 2024, and those interested can look forward to it.

Given BUSD's crucial role in the BenFen Chain, many may have concerns about how BUSD maintains its stability. Therefore, this article will delve into the anchoring and stability mechanisms of BUSD in a detailed yet accessible manner.

BenFen Chain will map various national fiat currencies as stablecoins, such as the US Dollar (USD), Japanese Yen (JPY), etc. The previously mentioned BUSD is the USD stablecoin mapped on the BenFen Chain, and similarly, JPY is represented as BJPY, with the token prices on BenFen Chain anchored to the corresponding fiat currencies.

We all know that behind any stablecoin, there is a mechanism in place to ensure its value. Some use over-collateralization, a basket of currencies, while others rely on algorithmic anchoring. The stablecoin on BenFen Chain falls into the category of algorithmic stablecoins. BenFen Chain has introduced BFC (BenFen Coin) pegged to BUSD, employing a stability mechanism to ensure the balance of supply and demand for BUSD and maintain price stability.

Flexible Currency Supply Mechanism:

A healthy market supply-demand relationship plays a crucial role in price stability. If there is an ample supply of assets when users want to buy BUSD and no surplus of assets in the market when users want to sell BUSD, it can be termed as a healthy currency supply policy. BenFen has designed a flexible currency supply mechanism that dynamically adjusts the circulation of BUSD based on market demand fluctuations, preventing excessive price volatility.

Automated Liquidity Management Mechanism:

Before delving into this section, let's review the liquidity pool configuration mechanism of Uniswap V3.

Uniswap V3 encourages users to provide liquidity near the market price. In the diagram, the horizontal and vertical axes represent the prices of the two tokens in the trading pair. Each colored arc represents a user's liquidity provision range, and the four arcs in the illustration precisely cover the price range from p0 to p4.

The liquidity depth varies across different price ranges in the market. However, due to the incentivization mechanism, liquidity is most profound near the execution price (as depicted below). This design choice in Uniswap V3, termed "concentrated liquidity," aims to minimize slippage and encourages users to concentrate liquidity provision around the current market price.

The liquidity provision on BenFen Chain differs from traditional approaches because the aim is to anchor the price at 1 US Dollar, rather than providing liquidity wherever there is trading activity. Therefore, BenFen Chain has devised an automated liquidity management mechanism to guide the price:

• When the system detects consecutive price increases deviating from 1 US Dollar, liquidity tilts towards the lower price range, reducing liquidity in the higher price intervals.

• When the system detects consecutive price decreases, liquidity tilts towards the higher price range, decreasing liquidity in the lower price intervals.

In such a mechanism, it effectively prevents overbuying/overselling behaviors caused by sharp market fluctuations, thereby buying time for the price to re-anchor. As illustrated below, when BUSD deviates below 1 US Dollar, users may panic and sell BUSD in large quantities to exchange for USDC. Without influencing liquidity, there could be a recurrence of the tragedy experienced by Luna. However, automated liquidity management can efficiently guide the price back to its anchor, providing time for minters and arbitrageurs and assisting in price corrections.

As all BUSD on the BenFen Chain is obtained through staking BFC, the total market value of BUSD should always be roughly equivalent to the total market value of BFC to maintain a healthy and stable anchoring relationship. Considering that the prices of BFC and the supply of BUSD are dynamically changing, our goal is to automatically adjust their total market values, approaching an infinite convergence.

\[ D(x) = 0.6x + \frac{1}{x + 0.16} - 1.3 + x \]

In the graph below, the horizontal axis (\(x\)) represents the ratio of the total market value of BUSD in the market to the total market value of BFC in the station, indicating the value proportion of stablecoins minted in the entire economic system relative to distributable BFC. Ideally, this ratio should approach 1.

The vertical axis (\(y\)) represents the gain depth. When the values of both sides approach 1, signifying the most stable and secure state of the system, the total market value of BUSD is slightly larger than the total circulating market value of BFC, approximately 1.2 times. When the values deviate significantly, BUSD will be minted to ensure the security of the economic system in response to unforeseen circumstances.

更多咨询: 🎉

🔗 Website: BenFen

🐦 Twitter: BenFen Official

🌐 Discord: BenFen Discord

🚀 Medium: BenFen Medium

BenFen Chain is a public blockchain developed using the Move language. Its most significant difference from other blockchains lies in using the stablecoin "BUSD" as its on-chain "first citizen." BUSD can be utilized for operations such as paying gas fees and staking, significantly enhancing BenFen's inclusivity and universality while lowering the learning curve for new users.

In addition, BUSD held by users on the BenFen Chain can be directly recharged into the OB Card, a credit card, for daily expenses. This includes purchasing overseas services (chatGPT/Netflix), fiat OTC transactions, etc. This feature substantially facilitates the flow of funds for users between on-chain and off-chain, domestic and international. The OB Card is set to be officially launched in 2024, and those interested can look forward to it.

Given BUSD's crucial role in the BenFen Chain, many may have concerns about how BUSD maintains its stability. Therefore, this article will delve into the anchoring and stability mechanisms of BUSD in a detailed yet accessible manner.

BenFen Chain will map various national fiat currencies as stablecoins, such as the US Dollar (USD), Japanese Yen (JPY), etc. The previously mentioned BUSD is the USD stablecoin mapped on the BenFen Chain, and similarly, JPY is represented as BJPY, with the token prices on BenFen Chain anchored to the corresponding fiat currencies.

We all know that behind any stablecoin, there is a mechanism in place to ensure its value. Some use over-collateralization, a basket of currencies, while others rely on algorithmic anchoring. The stablecoin on BenFen Chain falls into the category of algorithmic stablecoins. BenFen Chain has introduced BFC (BenFen Coin) pegged to BUSD, employing a stability mechanism to ensure the balance of supply and demand for BUSD and maintain price stability.

Flexible Currency Supply Mechanism:

A healthy market supply-demand relationship plays a crucial role in price stability. If there is an ample supply of assets when users want to buy BUSD and no surplus of assets in the market when users want to sell BUSD, it can be termed as a healthy currency supply policy. BenFen has designed a flexible currency supply mechanism that dynamically adjusts the circulation of BUSD based on market demand fluctuations, preventing excessive price volatility.

Automated Liquidity Management Mechanism:

Before delving into this section, let's review the liquidity pool configuration mechanism of Uniswap V3.

Uniswap V3 encourages users to provide liquidity near the market price. In the diagram, the horizontal and vertical axes represent the prices of the two tokens in the trading pair. Each colored arc represents a user's liquidity provision range, and the four arcs in the illustration precisely cover the price range from p0 to p4.

The liquidity depth varies across different price ranges in the market. However, due to the incentivization mechanism, liquidity is most profound near the execution price (as depicted below). This design choice in Uniswap V3, termed "concentrated liquidity," aims to minimize slippage and encourages users to concentrate liquidity provision around the current market price.

The liquidity provision on BenFen Chain differs from traditional approaches because the aim is to anchor the price at 1 US Dollar, rather than providing liquidity wherever there is trading activity. Therefore, BenFen Chain has devised an automated liquidity management mechanism to guide the price:

• When the system detects consecutive price increases deviating from 1 US Dollar, liquidity tilts towards the lower price range, reducing liquidity in the higher price intervals.

• When the system detects consecutive price decreases, liquidity tilts towards the higher price range, decreasing liquidity in the lower price intervals.

In such a mechanism, it effectively prevents overbuying/overselling behaviors caused by sharp market fluctuations, thereby buying time for the price to re-anchor. As illustrated below, when BUSD deviates below 1 US Dollar, users may panic and sell BUSD in large quantities to exchange for USDC. Without influencing liquidity, there could be a recurrence of the tragedy experienced by Luna. However, automated liquidity management can efficiently guide the price back to its anchor, providing time for minters and arbitrageurs and assisting in price corrections.

As all BUSD on the BenFen Chain is obtained through staking BFC, the total market value of BUSD should always be roughly equivalent to the total market value of BFC to maintain a healthy and stable anchoring relationship. Considering that the prices of BFC and the supply of BUSD are dynamically changing, our goal is to automatically adjust their total market values, approaching an infinite convergence.

\[ D(x) = 0.6x + \frac{1}{x + 0.16} - 1.3 + x \]

In the graph below, the horizontal axis (\(x\)) represents the ratio of the total market value of BUSD in the market to the total market value of BFC in the station, indicating the value proportion of stablecoins minted in the entire economic system relative to distributable BFC. Ideally, this ratio should approach 1.

The vertical axis (\(y\)) represents the gain depth. When the values of both sides approach 1, signifying the most stable and secure state of the system, the total market value of BUSD is slightly larger than the total circulating market value of BFC, approximately 1.2 times. When the values deviate significantly, BUSD will be minted to ensure the security of the economic system in response to unforeseen circumstances.

更多咨询: 🎉

🔗 Website: BenFen

🐦 Twitter: BenFen Official

🌐 Discord: BenFen Discord

🚀 Medium: BenFen Medium