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ICHI has launched the oneFUSE stablecoin for the Fuse community. Fuse provided the initial FUSE token liquidity needed to mint the first 25,000 oneFUSE. ICHI will contribute its native tokens to power the liquidity rewards program for oneFUSE holders.
Stablecoins have become an indispensable tool for driving the adoption of decentralized finance (DeFi). But popular stablecoin types are not without major flaws. Fully fiat-backed stablecoins like Circle’s USDC, a $27 billion asset, rely on centralized issuers for maintaining collateralization and staying in business. Ensuring transparency of reserves can also be a challenge as they are not tracked on-chain.
The alternative offered by automated, smart contract-based fiat-pegged stablecoins like DAI entails the need for users to mint them by providing collateral in excess of the amount of the stablecoin that they receive. The supply of such stablecoins is mostly driven by the leverage needs of cryptocurrency investors. This makes their peg stability vulnerable to sudden increases in demand from market participants in search of safe assets.
Clearly, a novel approach to the issuance of stablecoins is needed to fully realize their potential.
ICHI’s Decentralized Monetary Authority Protocol
ICHI is an innovative DeFi platform for launching fully collateralized stablecoins (oneTokens) with hybrid backing. For each oneToken, ICHI deploys a set of smart contracts called a “Decentralized Monetary Authority” (DMA). The DMAs and stablecoins they issue and redeem are fully governed by oneToken holders. ICHI’s smart contracts have been fully audited by security experts at Quantstamp — a leading security and audit firm.
Users wishing to mint a unit of oneToken need to provide a total of 1 USD in USDC and the relevant network’s token. The ratio between the amounts of USDC and the network token is unique for each oneToken.
As an example, if the oneToken in question is oneBTC and the minting ratio between USDC and BTC is 50/50, a user will need to provide $0.5 in USDC and $0.5 in BTC to get 1 oneBTC.
The USDC deposited by stablecoin-minting users is sent to the DMA’s vault and is used for satisfying oneToken redemption requests. The advantage of oneTokens for individual users is that they do not have to provide excess collateral to obtain them.
The corresponding network token deposits form the oneToken treasury. The treasury tokens can be further invested into DeFi protocols, with the investments becoming treasury positions. The USDC held in the vault can also be invested. The interest earned through DeFi strategies is distributed pro-rata among oneToken holders.
To the extent that the value of the community tokens in the treasury rises, it becomes possible for the users to mint the ICHI-based stablecoins with less USDC.
OneToken holders are solely responsible for treasury governance and collateral reserve, as well as investment strategies. The voting power of each community member is determined by their share of the outstanding oneToken supply. Voting takes place using Snapshot.
ICHI has already successfully launched stablecoins for the Filecoin and 1inch communities, and now it is the Fuse community’s turn to benefit from ICHI’s technology.
How Fuse integrates ICHI
The collaboration between Fuse and ICHI starts with the launch of the oneFUSE stablecoin on Ethereum. It is initially collateralized 80% with USDC and 20% with FUSE. oneFuse holders will be able to redeem their tokens for exactly 1 USDC minus the 0.45% redemption fee.
Fuse has contributed the initial liquidity deposit in USDC and FUSE to enable the issuance of the first 25,000 oneFUSE tokens. It has also provided the initial treasury reserves of $100,000 in FUSE tokens in order to establish the oneToken treasury.
The oneFUSE token has already been officially launched, with around 273,000 oneFUSE issued at the time of writing.
Users wishing to mint oneFUSE are able to do so via the ICHI V2 app. You are invited to follow our tutorial to learn how to mint oneFUSE.
oneFUSE Rewards Program
ICHI will supply its native ICHI tokens to power an 8-week liquidity rewards program for users depositing oneFUSE that is starting today at 3 pm UTC. The rewards will be 0.05 ICHI per block in weeks 1–4 and 0.025 ICHI per block in weeks 5–8, which sums up to around US$40,000 in total at the current prices. In order to participate, oneFUSE holders will need to stake their oneFUSE in the ICHI app. Instructions on how to stake are available in the aforementioned tutorial.
Currently, the governance of oneFUSE token and DMA is provided by the ICHI community, with oneFUSE holders set to take it over at a later date. ICHI will also run a validator node on Fuse Network, helping boost security and decentralization.
How the partnership benefits Fuse
The Fuse team is excited to partner with a major innovative stablecoin project. We believe that the collaboration with ICHI will allow us to accelerate the decentralization of governance over the Fuse-native FuseX suite of stablecoins. It will also help put the Fuse community more firmly in control of the value of the collateral backing Fuse-native stablecoins. In the longer run, oneFUSE will replace FuseDollar as the primary Fuse-native stablecoin.
The integration also enables Fuse to benefit from the ICHI team’s expertise in creating and maintaining innovative fully-backed stablecoins. This takes the burden of managing the backend of Fuse-native stablecoin issuance off the shoulders of the Fuse team allowing us to focus on doing what we are best at, namely, creating mobile-centric crypto payment and DeFi infrastructure.
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