This article contains a proposal for core update of Rome stablecoin. This proposal should be considered and discussed by the community; in case of absolute consent or ROME holders on-chain voting this proposal will be implemented by the Puzzle team.

Waves-native stablecoin ROME exists for 18 months and has grown to 2.4M in circulation while sustaining an amazing APY for its holders, averaging 35% APY from day 1. However a significant issue persists: sometimes the stablecoin gets depegged.

There are multiple common reasons for ROME depeg: (1) explosive growth of minted amounts without a sufficient demand increase and (2) volatility of the tokens which it has liquidity pools with.

ROME does have peg mechanics such as Rome Keeper by design, but they seem to be not powerful enough to maintain the peg and are not implemented on the core protocol level, more like a derivative product on top.

Hence, we are willing to propose an implementation of the new core mechanic aiming to make ROME undepeggable. The idea is inspired by the fact that the depeg periods are an amazing timing for ROME minters to buy cheaper ROME and repay their debts.

Proposal: Enable “repay my ROME at discount” functionality for ROME minters.

This is how it would work:

1. ROME minters can individually set a non-obligatory RomeDiscountForRepay parameter, for example 2%

2. repayRomeAtDiscount() function is added to smart contract: it can be invoked by anyone with ROME payment attached

3. The invoker gets minter’s collateral in exchange, particularly the amount calculated as: (RomeAttached/CollateralPrice) * (100%-RomeDiscountForRepay), with CollateralPrice being received from Puzzle Lend oracle

This system would be beneficial for all stakeholders by providing a win-win-win solution in situations of depeg:

• minters get their debts automatically repaid at discount,

• invokers get the premium of a difference between ROME market price and minter’s discount,

• ROME holders get it brought closer to the peg.

If enough minters set RomeDiscountForRepay parameter, this would basically make ROME undepeggable, as any depeg situation will force its buyback.

There is a Minter with 1m ROME minted with 1k WEBU as collateral. 1 WEBU = $2000. The minter sets RomeDiscountForRepay at 2%.

ROME is now traded at 0.96 USD. Bob has decided to take advantage of it by doing an arbitrage with 100k ROME.

Bob invokes repayRomeAtDiscount() attaching 100k ROME. 100k ROME is immediately used to repay Minter’s debt. Bob receives 49 WEBU back, worth $98k, and sells it back to ROME, getting 98,000 * 1.04 = 101,920 ROME.

Outcome: Bob earned 1920 ROME. Minter got a 2000 ROME discount at repaying their debt. 100k ROME has been bought back.

We ask you to share your opinion on the RUP proposal in Puzzle Telegram Chat, especially if you disagree with this proposal or have something to add to it. There will be a discussion period of 5-10 days, after which it will be immediately brought to the implementation phase (up to 30 days) or, if there won’t be an agreement in the community, being voted on by ROME holders, which would require an additional development of voting SC (another 15 days).

Thank you for your attention to this matter! Let’s bring peg to ROME!

For deeper understanding of the proposal the following references are recommended for community consideration:

1. Something similar was implemented in the LUSD protocol. However they allow repayment for a user with the lowest health without any discounts. Our idea moves it to the next level.

2. The concept was also discussed a few years ago by the following article: medium.com/@izhur27/island-isl-undepeggable-stablecoin-model-b33b4e2e0488 – under the name of “Island” stablecoin.

This article contains a proposal for core update of Rome stablecoin. This proposal should be considered and discussed by the community; in case of absolute consent or ROME holders on-chain voting this proposal will be implemented by the Puzzle team.

Waves-native stablecoin ROME exists for 18 months and has grown to 2.4M in circulation while sustaining an amazing APY for its holders, averaging 35% APY from day 1. However a significant issue persists: sometimes the stablecoin gets depegged.

There are multiple common reasons for ROME depeg: (1) explosive growth of minted amounts without a sufficient demand increase and (2) volatility of the tokens which it has liquidity pools with.

ROME does have peg mechanics such as Rome Keeper by design, but they seem to be not powerful enough to maintain the peg and are not implemented on the core protocol level, more like a derivative product on top.

Hence, we are willing to propose an implementation of the new core mechanic aiming to make ROME undepeggable. The idea is inspired by the fact that the depeg periods are an amazing timing for ROME minters to buy cheaper ROME and repay their debts.

Proposal: Enable “repay my ROME at discount” functionality for ROME minters.

This is how it would work:

1. ROME minters can individually set a non-obligatory RomeDiscountForRepay parameter, for example 2%

2. repayRomeAtDiscount() function is added to smart contract: it can be invoked by anyone with ROME payment attached

3. The invoker gets minter’s collateral in exchange, particularly the amount calculated as: (RomeAttached/CollateralPrice) * (100%-RomeDiscountForRepay), with CollateralPrice being received from Puzzle Lend oracle

This system would be beneficial for all stakeholders by providing a win-win-win solution in situations of depeg:

• minters get their debts automatically repaid at discount,

• invokers get the premium of a difference between ROME market price and minter’s discount,

• ROME holders get it brought closer to the peg.

If enough minters set RomeDiscountForRepay parameter, this would basically make ROME undepeggable, as any depeg situation will force its buyback.

There is a Minter with 1m ROME minted with 1k WEBU as collateral. 1 WEBU = $2000. The minter sets RomeDiscountForRepay at 2%.

ROME is now traded at 0.96 USD. Bob has decided to take advantage of it by doing an arbitrage with 100k ROME.

Bob invokes repayRomeAtDiscount() attaching 100k ROME. 100k ROME is immediately used to repay Minter’s debt. Bob receives 49 WEBU back, worth $98k, and sells it back to ROME, getting 98,000 * 1.04 = 101,920 ROME.

Outcome: Bob earned 1920 ROME. Minter got a 2000 ROME discount at repaying their debt. 100k ROME has been bought back.

We ask you to share your opinion on the RUP proposal in Puzzle Telegram Chat, especially if you disagree with this proposal or have something to add to it. There will be a discussion period of 5-10 days, after which it will be immediately brought to the implementation phase (up to 30 days) or, if there won’t be an agreement in the community, being voted on by ROME holders, which would require an additional development of voting SC (another 15 days).

Thank you for your attention to this matter! Let’s bring peg to ROME!

For deeper understanding of the proposal the following references are recommended for community consideration:

1. Something similar was implemented in the LUSD protocol. However they allow repayment for a user with the lowest health without any discounts. Our idea moves it to the next level.

2. The concept was also discussed a few years ago by the following article: medium.com/@izhur27/island-isl-undepeggable-stablecoin-model-b33b4e2e0488 – under the name of “Island” stablecoin.