Stablecoins are an unavoidable topic in the blockchain world. Algorithmic stablecoins have become synonymous with Ponzi. In the past, USDC, a compliant stablecoin that we generally believed to be safe, almost suffered losses due to the collapse of Silicon Valley Bank. Tangible gave an idea on how to design a relatively decentralized stablecoin that is supported by the underlying assets and can help users obtain benefits.

Tangible focuses on the concept of "real-world assets + stablecoins". According to data from Defi Llama, as of March 15, its TVL has increased by 15.7 times in the past month, making it one of the fastest-growing projects on Polygon recently. While growing rapidly, Tangible's core data is not open and transparent, and there are hidden risks.

USDR: High interest rates for deposits, big bribes on Velodrome and Thena

DeFi users who are actively looking for liquidity mining opportunities may find that a stablecoin with extremely high yields has recently appeared on Velodrome and Thena, and the APR of the wUSDR/USDC trading pair in these two DEXs is usually as high as 100%. According to the mechanism of these two Forks from Solidly’s DEX, Tangible, the issuer of USDR, either holds a large number of veTokens for voting, or pays bribes every week to attract veToken holders to vote for themselves.

The dashboard compiled by Dune@0x khmer shows that the wUSDR/USDC trading pair is currently the biggest briber for DEX Velodrome on Optimism, surpassing USDC/DOLA, SONNE/USDC and other trading pairs. The amount of bribes in the most recent week was about $93,000, and the amount of bribes increased every week. The bribery funds are mainly the stable currency USDC or USDR packaged version WUSDR, and part of it is OP.

A similar situation also appeared on Thena of the BNB chain. In the last week, the wUSDR/USDC transaction pair paid a bribe of $35,000 on Thena. The bribe amount also continued to rise, and all payments were made through the stable currency USDC.

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TNFT market

There are two main products in Tangible: TNFT (Tangible non-fungible token, Tangible non-fungible token) market and stable currency USDR.

Tangible allows users to use cryptocurrency to purchase goods from suppliers, Tangible mints TNFT to send to buyers, and deposits the physical item represented by this TNFT at Tangible Custody. Owners of TNFT can transfer, sell their assets, or exchange them for physical objects. The detailed process is as follows.

• Users browse and purchase items on the Tangible marketplace, and smart contracts handle related item prices and fees.

• The TNFT corresponding to the item is minted and sent to the buyer's wallet, and the TNFT can be used for holding or trading.

• At the same time, Tangible buys physical goods from supplier partners.

• Physical purchases are shipped to physical vaults.

The physical assets corresponding to TNFT can be commodities that are not very liquid, such as artwork, wine, antiques, gold bars, gold bars, real estate, etc.

In addition, Tangible also provides fragmentation services (Tangible Fractions), TNFT holders can sell a part of the TNFT they hold at a specified price. For example, if a watch is worth $100,000, the holder of TNFT can place an order for 40% of the value of the watch for $42,000.

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How the Stablecoin USDR Works

On the basis of the above system, Tangible issued a stable currency Real USD (USDR), mainly investing in tokenized real estate tokens and earning income. In the long run, real estate will continue to appreciate in value. The invested real estate will be rented out to tenants, and the income will be paid to USDR holders through rebase every day.

USDR is usually minted 1:1 with DAI, but a smaller share can also be minted with Tangible’s native token, TNGBL. The amount of USDR that can be minted by TNGBL = (Amount of USDR that has been minted - USDR that has been redeemed) * 10%.

Of the reserves for minting USDR:

• 50% -80% invested in Tangible real estate NFT;

• 10% -50% are held in the form of DAI;

• 10% held in the form of TNGBL;

• 10% -20% is the liquidity owned by the protocol on the protocol Curve;

• 5% -10% is the insurance fund.

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What if I can't redeem it?

From the above, it can be seen that at least 60% of the reserves for minting USDR are invested in real estate NFT or its own TNGBL token. Tangible holds a small amount of DAI for the convenience of users to redeem. What if there is no liquidity because real estate or TNGBL prices fall, or large investors want to exit? The liquidity held by Tangible for exit may not be enough, but the project party has already figured out a way for this.

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Tangible's Balance Sheet

As shown in the figure below, Tangible official website data shows that the number of USDR currently issued is 7.82 million, while the total assets owned by the agreement are 9.64 million US dollars. There is a surplus of $1.82 million in the project, so while large weekly stablecoin bribes are paid to attract liquidity, Tangible also has reason to say that the bribes are funded from profits.

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Summary and reflection

USDR's stablecoin model can provide a way of thinking for the design of stablecoins, that is, the bottom layer holds assets that can generate interest, and holders of stablecoins can obtain income, preventing centralized stablecoin issuers such as Circle from obtaining asset income themselves without being able to The situation of fully guaranteeing the safety of funds.

However, Tangible does not have a strong endorsement. All physical assets and the authority to issue TNFT are controlled by Tangible Custody. Before the official gives strong evidence, the purchase of TNFT through this project has a high counterparty risk. Project Doubt might be a better option.

With a circulation of only 7.82 million USDR, Tangible pays around $128,000 in bribes per week in Velodrome and Thena alone. It may be unsustainable to attract users to mint USDR with DAI 1: 1 through high returns.

Also because of centralization issues, Tangible can also manipulate the price of TNFT issued by Tangible Custody to achieve "excess reserves".