AMA with Sable Finance, the next cIFO project on PancakeSwap
Community
2023-07-25

Hello CAKE holders! 🥞

We will have the next cIFO with Sable Finance on July 26th. We held an AMA (Ask Me Anything) with Kaitlin from the Sable Finance team to get to know the project more! If you missed participating in the AMA, read this article and learn about their project. This time, a decentralized stablecoin protocol!

What is cIFO?

cIFO (Community Initial Farm Offering) v2.0 is the new IFO subtype event where you’ll be able to buy brand new tokens using CAKE tokens🥞 Community IFOs will be projects that we believe, while experimental, are potentially important for the ecosystem.

How to participate? To participate in the cIFO: 🖼 Private Sale: BOTH PancakeSquad NFT holders OR point holders (≥ 1,000 points) can participate

🔒 Public Sale: Lock CAKE in the CAKE Syrup pool

🗓 Mark the date for cIFO: 26 July, 12:00 UTC

Please refer to the IFO page on our website!👇 https://pancakeswap.finance/ifo

The Sable Finance cIFO will be held with our new IFO format (cIFO 2.0). To learn more about it, check out the voting proposal:👇 https://pancakeswap.finance/voting/proposal/0x01ced179a39d30bc11436fd7f578ae45089bacaace57caa47881146fce7586ba

Opening Words From Sable Finance Hello, everyone! I'm Kaitlin, the Marketing Lead at Sable Finance. Thank you for having me.

I'm excited to connect with the CAKE community to share our exciting venture into the decentralized stablecoin realm🧡

My journey into DeFi began in 2020, where I met awesome builders who eventually became the backbone of the Sable core team.

Let me first share some background about the current stablecoin landscape: Since the fall of Silicon Valley Bank (SVB), we can all see the ripple effects brought upon by centralized stablecoins😢

It led to the depegging threat on $USDC, along with other alternatives such as $FRAX and $DAI, which all collapsed like a Jenga Tower.

Even the $BUSD is subject to regulatory hindrance, which could wipe out a pillar in the BNB ecosystem.

Sable Finance is a reformative stablecoin protocol on the BNB and Arbitrum chains.

Users will be able to mint USDS, a decentralized stablecoin fully collateralized by BNB (in Beta) and Ethereum LSD (in V2) at a minimum collateral ratio of 110%.

Our protocol's unique offerings include: 👑 Borrow $USDS at 0% interest rate 💰 Open new horizons for $BNB and $ETH LSD holders leveraging opportunities 🌊 Stake SABLE-BNB LP to earn from our protocol's revenue

At the core of our protocol lies the vision for capital efficiency and yield maximization.

Let’s begin with the Questions!

Q1: First thing first, What are the key features in Sable? How can users participate in Sable?

Ans 1: There are 3 key features in Sable Finance:

(i) Stablecoin borrowing (ii) Stability pool (iii) LP Staking

Let me explain it one by one😀

(i) Stablecoin borrowing

Sable Finance offers interest-free loans with less collateral locking to give users a much higher capital efficiency.

If you are a BNB or ETH LSD owner, who believes in the potential growth, considering utilizing them for liquid funds through Sable Finance can be a wise decision.

Sable allows you to easily borrow USDS against your BNB or ETH LSD holdings by locking them up on our platform, withdraw the funds to access your ETH LSD liquidity, and repay the loan at a later time.

(ii) Stability pool

Now we have people who borrow our stablecoin USDS at a minimum collateral ratio of 110%, what if it falls below? This is where Stability Pool plays a role.

Stability Pool serves as a primary source of liquidity to repay any USDS debt from liquidated troves and reward the stability pool depositors with the liquidated collateral. Any USDS holder can deposit USDS to the Stability Pool.

2023-07-25 23.17.58.jpg Here's a chart illustrating how Stability Pool works!

et’s say there is a total of 1,000 USDS in the Stability Pool and you deposited 500 USDS, meaning you own 50% of the stability pool share.

Now, a Trove with debt of 500 USDS and collateral of 2 BNB is liquidated at an BNB price of 270, and thus a collateral ratio of 108% ((2 * 270) / 500 * 100%).

Given that your pool share is 50%, your USDS deposit will go down by 50% of the liquidated debt, i.e. from 500 USDS to 250 USDS.

In return, you will gain 50% of the liquidated collateral, i.e. 1 BNB worth $270.

Your net gain from the liquidation is $270 - $250 = $20💰

USDS depositors can immediately withdraw the collateral received from liquidations and sell it to reduce their exposure to BNB if the USD value of BNB is expected to decrease.

(iii) Staking

By staking SABLE-BNB LP, you can earn the fee revenue that is generated by Sable. A pro rata share of the borrowing and redemption fees in USDS and BNB/ETH LSD will be distributed to the LP in Sable’s Staking Pool.

There are no lock-up periods and users can withdraw the staked LP at any time.

We have filmed a YouTube video showcasing how to open a trove to borrow USDS, deposit USDS in the Stability Pool and stake SABLE-BNB LP in our dApp. Feel free to check out our YouTube channel (https://www.youtube.com/@SableFinance) for a step-by-step guide ;)

Q2: What’s the difference between Sable Beta and Sable V2?

Ans 2: Great question!

Behind the goal of becoming the #1 reformative stablecoin backed by Ethereum LSD, our vision is to benefit our users by embracing yield maximization and capital efficiency in our stablecoin USDS.

2023-07-25 23.20.30.jpg

🧠 Sable Beta 🧠

We will launch our Beta version shortly after the community IFO to provide all essential functionalities of $USDS and $SABLE. Our Beta will accept only BNB as a collateral. Depositing BNB on Sable Beta will grant you access to the very first experience of minting the immutable stablecoin in USDS.

The pathway is very direct: BNB is used as collateral for borrowing USDS, a stablecoin with a peg maintained by redemption and debt pay off.

2023-07-25 23.21.45.jpg 💫 Sable V2 💫

Other than being an advanced version of Sable beta, V2 design will be upgraded to give higher yield optimization and cost efficiency with a more retail friendly interface.

To cover the market need, Sable V2 will be launched on both Arbitrum and BNB Chain, providing the unique experience to users, using LSDfi as multi-collateral.

There are few key and innovative features in Sable V2.

(i) Locking SABLE for veSABLE

SABLE token holders will be able to lock their SABLE LP tokens for veSABLE, which will be the key token used for gauge voting in deciding the emission of SABLE to different LSD collateral.

The implementation of vote locking and governance mechanism will grant the community control over the emission allocations, which would motivate more users to lock SABLE for future yield, hence minimizing SABLE circulation and enhancing price stability.

(ii) LP staking in protocol staking pool and stability pool

Staking on Sable would be different from other protocols — instead of using single-sided protocol tokens, we opt for LP tokens to achieve capital efficiency. Other than earning veSABLE for gauge voting, parallel LP-ing on DEX would also provide users with yield from trading fees on DEX as well.

Other than such, our stability pool would also accept LP token with partnering DEX, enabling additional pathways to earn liquidation gains, and SABLE LP trading fees

This could increase the cost effectiveness on SABLE emissions, as you can see from figure above, all emissions via multiple pathways will eventually be put back into a single stability pool, which will buy back debts when collateral ratio falls. However, emission will be adjusted gradually based on the usage which will add value for early investors who support our sustainability in the SABLE ecosystem.

To learn more about the different features in Sable Beta and Sable V2, check out our Medium article for details: https://medium.com/@sable_finance/capital-efficient-stablecoin-from-sable-beta-to-lsd-backed-sable-v2-a1fd371338ba

Q3: How is Sable Finance different from other stablecoin protocols?

Ans 3: Centralized stablecoins like USDC and USDT are currently dominating the stablecoin market across many L1s, including BNB Chain.

In comparison, our stablecoin, USDS stablecoin, which is backed by BNB (Beta) and ETH LSDs (V2), was designed with decentralization as a core principle. It is completely free of centralization, custodian, and censorship risks, which makes it a more secure and transparent option for the BNB community.

In terms of our design specs, we carefully studied the existing decentralized offerings in the market, learning from both the good and the bad. In Sable v2, Our multi-collateral design, powered by veTokenomics, allows us to provide users with a stablecoin that is both decentralized and capital efficient.

This design ensures that our users can benefit from the stability of a stablecoin without compromising on decentralization. Additionally, our capital efficient staking design allows users to earn both trading and revenue fees at the same time, further incentivizing them to participate in our protocol.

Q4: What are the token utilities of SABLE? How can users make use of SABLE to earn yield?

Ans 4: 100% of our protocol's borrowing and redemption fees accrue to our governance token, $SABLE. To capture this, SABLE holders can provide liquidity to the SABLE/BNB pool on Pancakeswap and subsequently stake the LP token on our platform to earn both trading fees and a share of our protocol's revenues.

For instance, if your staking position represents 10% of the total SABLE/BNB LP staked, you will earn 10% of Sable's protocol fees.

In Sable V2, we aim to further improve the utility of $SABLE by implementing veTokenomics.

SABLE token holders will be able to lock their SABLE LP tokens for veSABLE, which will be the key token used for gauge voting in deciding the emission of SABLE to different LSD collateral.

The implementation of vote locking and governance mechanism will grant the community control over the emission allocations, which would motivate more users to lock SABLE for yield + governance power, hence minimizing SABLE circulation and enhancing price stability👍

Q5: What is the roadmap of SABLE? What does the team have in mind to push for USDS utilization and staking activities in future?

Ans 5: The launch of Sable is represented by the Beta version, which provides the essential functions of $USDS, creating a fully decentralized BNB-backed stablecoin for the BNB community.

With the emergence of ETH LSDs, Sable V2 plans to expand to Arbitrum and also incorporate these yield-bearing LSDs as collateral.

This expansion will increase the addressable market for USDS whilst leveraging the growth of LSDFi.

In parallel, we will be making improvements to Sable’s product design.

For example, we plan to introduce a shared stability pool for liquidations, ve-tokenomics to direct emissions and governance, and other enhancements in Sable V2.

Live Q&A

Q1: Could you explain the concept of interest-bearing stablecoin and how USDS holders can expect to earn a base APY by collateralizing LSD on the Sable protocol? What are the expected benefits of this feature, and when is it planned to be available (V2)?

Ans 1: Good question! While we are still working on the risk assessment and research of different ETH LSTs and are yet to publicize the design specifications for Sable V2, our initial idea is that $SABLE holders will have the ability to ve-lock $SABLE to direct emissions towards minting USDS using a specific collateral type.

By doing so, users will earn a base APR simply by minting USDS. This feature can potentially attract LSD protocols to accumulate $SABLE, incentivizing users to mint USDS using their Ethereum LSD and/or offering bribes to $SABLE holders for their voting power.

We will provide detailed documentation once we confirm the design specs and complete audits for Sable V2!

Q2: The burning of USDS during redemptions is a unique approach to maintaining the peg. Could you share any data or insights on how redemptions have contributed to stabilizing USDS during previous market fluctuations?

Ans 2: Redemptions play a crucial role in safeguarding the price floor of USDS at $1 by facilitating direct arbitrage.

If the value of USDS falls below the peg, an arbitrageur can redeem their USDS with the system at the fixed price of $1, thereby reducing the overall supply of USDS; which will have a positive effect on the price of USDS.

As we are currently in the pre-launch stage, I am unable to provide any data or insights regarding the behavior of this mechanism during periods of market fluctuations.

However, in general, users are able to redeem against our system whenever the value of USDS falls below $1, regardless of whether or not this occurs during market fluctuations. It’s important to remember that the riskiest Troves are redeemed against first — i.e. the Troves with the lowest collateral ratios. To avoid being affected by redemptions, users should monitor their position among Troves and adjust accordingly.

Q3: What security mechanisms are in place to protect the Stability pool? Is there a multi-sig in place?

Ans 3: So the Stability Pool is a first line of defence in Sable Finance.

When the Total Collateral Ratio (TCR) drops below 150%, the Recovery Mode is triggered

During the Recovery Mode, Troves with a collateral ratio below 150% can be liquidated.

When the Recovery Mode is triggered, Sable will block borrowers transactions in order to prevent further decrement of the TCR.

In this mode, new USDS can only be issued by adjusting existing Troves in a way that improves their collateral ratio, or by opening a new Trove with a collateral ratio of at least 150%. If an adjustment to an existing Trove reduces its collateral ratio, the transaction is only executed if the resulting TCR is above 150%.

Recovery Mode aims to encourage borrowers to take actions that quickly increase the TCR and to motivate USDS holders to refill the Stability Pool. From an economic standpoint, Recovery Mode is structured to encourage debt repayments and collateral top-ups. Recovery Mode serves as a safeguard for the protocol, to drive users to maintaining the health of Sable😉

More on Stability Pool and Recovery Mode: https://sable-finance.gitbook.io/docs/concept-overview/recovery-mode

Q4: In what ways does Sable Finance promote capital efficiency and optimal utilization of users' assets? How does the platform enable users to make the most out of their ETH LSD holdings?

Ans 4: This question goes back to the staking pool design.

Instead of single-sided token staking, we innovate on the use of SABLE-BNB LP for users to earn our protocol fees (= issuance fees + redemption gains).

Since LP token itself embodies fees sharing in a DEX, users are able to enjoy triple yield from staking.

This creates a win-win situation for users and the protocol since yield is maximized and liquidity efficiency is enhanced😉!

As for ETH LSD leverage, we actually offer zero interest for USDS borrowing. Soon when USDS minting feature goes live (shortly after TGE), we will list USDS on partnering DEX. By LP-ing in DEX, users are able to enjoy additional layer of yield w/o forgoing their ETH LSD.

Since it’s 0% interest, users can borrow USDS as long as they want on condition of a healthy and solid collateral ratio!

Q5: How do you prevent de-pegging of your own stablecoin?

Ans 5: I think this is a question that most users are concerned with. Let me explain in detail😉

Our stablecoin USDS maintains its peg through a combination of hard and soft peg mechanisms.

🪖 Hard Peg Mechanism Sable Finance operates under the Hard peg mechanism, where USDS value is directly tied to the US dollar. This link is maintained through incentives and penalties. If USDS falls below $1, users are encouraged to buy USDS from the market and burn their USDS with a discount on the deposited collateral. This action reduces USDS supply and drives the price back to $1. Conversely, if USDS exceeds $1, minting new USDS is penalized with a higher collateral fee, reducing demand and bringing the price back down to $1.

🍦 Soft Peg Mechanism Sable also employs a soft peg mechanism between the price floor ($1) and the price ceiling ($1.1), relying on user incentives to maintain stability. Users tend to act in ways that bring the USDS price back to $1 when it deviates, including buying or selling USDS on the market and managing collateral deposits.

As USDS approaches the $1.10 price ceiling, arbitrage trading potential decreases, leading to reduced buying pressure. If the price reaches $1.10, significant selling pressure is expected due to the price ceiling mechanism. Moreover, as the price of USDS rises, borrowers can achieve higher leverage ratios, making it more attractive for Trove owners to mint and sell USDS, which pushes the price down.

The Stability Pool becomes appealing for USDS holders to earn risk-free yields in ETH LSD and SABLE.

However, as the USDS price increases, some depositors may shift to liquidity-providing positions, which helps bring the USDS price back down. Liquidity providers arbitrage the USDS price by selling a portion of their USDS for pairing assets, further contributing to price stability😉

Here's our documentation on the peg mechanism: https://sable-finance.gitbook.io/docs/concept-overview/peg-mechanism

Sable Finance Quiz!!

The Sable Finance team prepared a few questions on zealy, lucky users who answered all the questions correctly won rewards. 2023-07-25 23.33.55.jpg

If you want to participate in this kind of events, follow up in our social channels to find out when the next AMA will be!

Final Words from Sable Finance

First of all, I’d like to express our gratitude towards the CAKE community. You guys have been an integral part of our story ; )

We appreciate all the time, efforts and attention that both the PancakeSwap team and communities have put in to fully understand our ultimate decentralized stablecoin protocol, which we stand by the ideology of maximizing yield and capital-efficiency.

Following the token generation event, the Sable dApp launch is right around the corner!

Our devs are gearing up to provide an easy-to-user USDS borrowing experience. In the meantime, don’t miss the opportunity to grab 500K SABLE tokens in PancakeSwap’s Syrup Pool.

And here’s some sneak-peek exclusively for our CAKE community - there will be early adopter rewards for our Sable Beta participants.

Make sure you follow our socials so that you won’t miss our launch plan announcement!

https://link3.to/sable

Thanks everyone!

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