Stablecoins have become essential to the cryptocurrency ecosystem, providing a stable and reliable means of transferring value between digital assets and traditional finance. However, the problems of censorship risk, loss of peg, and decaying confidence in fiat-backed stablecoins have raised concerns among the crypto community. The UNO stablecoin, the first StarkNet-native stablecoin, aims to solve these problems and become the stablecoin of choice within the StarkNet ecosystem. In this blog post, we will introduce UNO and discuss how UNO plans to achieve this goal.
What is UNO?
UNO, to be launched soon by Nostra Finance, is a stablecoin pegged to the US dollar and fully backed by high-quality censorship-resistant crypto assets. It is built on the StarkNet network, a Layer-2 scaling solution for Ethereum. UNO aims to provide a stable, secure, and censorship-resistant means of transferring value within the StarkNet ecosystem. It is fully decentralized, both back-end and front-end, and is fully audited for security.
UNO’s Solution to Stablecoin Problems
- Loss of Peg:
Stablecoins face the risk of losing their peg, either upward or downward. UNO plans to mitigate these risks by increasing the use cases of UNO for borrowing and swapping. This will provide liquidity and demand for the stablecoin, reducing upward-pegging risks. To mitigate downward pegging risks, UNO will be over-collateralized, and a robust liquidation mechanism with responsible parameters will be implemented.
- Censorship Risk:
Censorship risk is a significant concern for stablecoins, as many are backed by fiat currencies subject to government regulation and control. UNO plans to address this risk using immutable contract deployment, uncensorable assets, and non-US domiciled core contributors.
Mechanisms:
UNO is pegged to the US dollar. The stability of the peg is maintained through the minting and redemption mechanisms.
- Minting
UNO is minted through Nostra’s Money Market’s collateralized borrowing, where users deposit ETH tokens into their Nostra account to use as collateral, which is converted into iETH-c tokens. For every UNO borrowed, it is automatically minted via UNO’s fully decentralized smart contracts, and users need to maintain their account’s Health Factor above Nostra’s Health Factor Threshold to avoid liquidation.
- Burning
When UNO is returned, it is immediately burnt via its fully decentralised smart contract.
There are two methods of returning minted UNO:
- User repays borrowed UNO tokens in Nostra and gets their collateral back.
- User gets liquidated, the liquidator repays the UNO debt and receives collateral.
- Fees
The following fees may be applicable:
- A percentage of the collateral interest received.
- Fee to be paid when an account is liquidated.
Read the mechanisms in detail on the Nostra docs
Features:
- Crypto-Backed:
UNO is fully backed by high-quality censorship-resistant crypto assets, providing transparency and security for users.
- Earn-to-mint
Your ETH collateral is deposited to the Nostra Money Market to earn interest while you borrow UNO
- Over-Collateralized:
UNO is over-collateralized, reducing the risk of loss of peg and providing stability for users.
- Decentralized:
UNO is fully decentralized, making it resistant to censorship and government intervention.
Use Cases
UNO is positioning itself as the preferred stablecoin for the Starknet ecosystem, offering various use cases to boost the growth of Starknet and DeFi adoption.
To sum up, UNO is a promising stablecoin that aims to solve the problems of censorship risk, loss of peg, and decaying confidence in fiat-backed stablecoins. By using high-quality censorship-resistant crypto assets, over-collateralization, and a robust liquidation mechanism, UNO provides stability and predictability for users. Using immutable contract deployment and having non-US domiciled core contributors also ensures that UNO is resistant to censorship and government intervention. UNO is a significant step forward for the stablecoin ecosystem and could potentially become the stablecoin of choice within the StarkNet ecosystem.
What is Nostra?
Nostra is a comprehensive decentralized finance (DeFi) platform, composed of three main products which make up its Liquidity Layer, including Nostra Money Market, UNO (the first stablecoin native to Starknet), and Nostra Swap (a DEX for stablecoins). Individuals can participate in various activities such as lending, borrowing, and crypto swapping.
This is a brief summary of the UNO stablecoin. To learn more about Nostra Finance and UNO, please visit this link.
Website: https://nostra.finance
Twitter: https://twitter.com/nostrafinance
