DeFi Project Basis Cash Brings Its Defunct Stablecoin Back into Market

UTC by Bhushan Akolkar · 3 min read
DeFi Project Basis Cash Brings Its Defunct Stablecoin Back into Market
Photo: Unsplash

The DeFi project will link the Basis coin to two other crypto assets: Basis Shares and Basis Bonds. These assets shall control the price of BAC at $1 based on the supply and demand.

Decentralized finance (DeFi) project Basis Cash has relaunched its earlier defunct stablecoin Basis back in the market. Stablecoin Basis, previously called Basecoin, had secured $133 million in funding just before the crackdown by the US SEC but had to return everything after the regulatory action.

On Monday, November 30, the DeFi project has opened up its smart contracts back. Speaking to CoinDesk, the Basis project leaders with anonymous names “Rick” and “Morty,” said:

“In the long term, we look forward to seeing Basis Cash be used widely as a base layer primitive such that there is organic demand for the asset in many DeFi and commercial settings”.

Similar to other stablecoins, Basis Cash (BAC) is the crypto equivalent to one USD. The Basis Cash price shall be linked to two other crypto assets: Basis Shares and Basis Bonds. Starting November 30, Basis will distribute the BAC stablecoin on a five-day period. A total of 50,000 BAC shall be distributed with 10,000 daily distribution.

To receive BAC, folks need to deposit any five of these stablecoins in the smart contract: yCRV, DAI, SUSD, USDT, and USDC. Also, depositors can’t drop more than 20,000 from a given account. The daily reward distribution happens on a pro-rata basis and users can take out their coins back anytime.

Uniswap V2 Pools Spun Up by Basis Stablecoin

Post the initial five-day distribution period, the Uniswap V2 pools will come into action. The two pairs will be BAC-Basis Shares (BAS) and BAC-DAI. These two Uniswap pools will reportedly distribute a million BAC tokens. Compared to other DeFi application, Basis Cash has fewer requirements for users in terms of posting collaterals.

Post the first five days of distribution, all of the BAS stablecoin utility will happen in these two Uniswap pools. Rick Sanchez wrote:

“Seigniorage shares–style stablecoins … are much more susceptible to black swan failure than Maker or Tether – and I am not ruling out the possibility that Basis Cash will de-peg significantly in the early days of the protocol (in fact, I think it’s highly likely). What we have high conviction on is that 1) the protocol has the ability to recover from most of these failures, and that 2) such failures will become much less frequent and severe over time as new participants enter.”

Also, as noted, the Basis Cash price will get support from the two crypto assets. The reason is BAC stablecoin has no real backing of USD in a bank account. In this case, an algorithmic system determines the real value of BAC and keep it equal to $1.

In case the BAC value drops below $1, the system will issue Basis Bonds. These Basis Bonds shall be available for $1. When the price of BAC goes above $1, one can redeem the bond.

Although the initial supply of BAC is only 50,000, it can be later adjusted based on the demand. In case the BAC demand shoots as it goes live, the price will break past its dollar-peg, In this case, the smart contracts will print more BAC. Sanchez said:

“In the short term, given one needs to provide liquidity for Basis Cash against Dai to earn Basis Share tokens, liquidity providers looking to farm Basis Share tokens will buy Basis Cash – farming demand drives initial demand and attendant seigniorage.”

Altcoin News, Blockchain News, Cryptocurrency news, News
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Related Articles
By August 24th, 2020
Business NewsEditor's ChoiceInvestors NewsMarket NewsNews Warren Buffett Investment Portfolio: Is He Conservative Grandpa or Ingenious Tech Investor?
By August 24th, 2020

Berkshire Hathaway’s cashing up in an environment which in the past has seen it invest heavily counter-cyclically – some of Buffett’s biggest and most profitable plays have been during times of crisis – and its foray into a gold stock underscores his risk-aversion.