VARIABLE TIME DOLLAR - FAQ
Essential information on Variable Time Dollar (VTD)
Last updated
Essential information on Variable Time Dollar (VTD)
Last updated
Variable Time Dollar (VTD) is an algorithmic, dynamic supply, non-collateral backed, censorship resistant, ERC-20 stablecoin with variable epoch lengths, and multi-pool liquidity.
Like other DeFi native stablecoins, VTD aims to be a building block in the rapidly growing castle of money Legos that is decentralised finance. Like its predecessors, VTD does this through its permissionless composability with DeFi products, its stability as an asset, and its deep liquidity (as its adoption and marketcap grows).
VTD is a fork of Dynamic Set Dollar (DSD), which is itself a fork of Empty Set Dollar (ESD). For an explanation of how DSD differs from ESD and how all three differ from “traditional” stablecoins, please refer to this article.
The key innovation brought by VTD is dynamic epoch lengths of between 2-6 hours.
Problem:
ESD’s 8-hour epochs generate low returns but longer expansion periods, meaning the asset price tends to stay above 1 dollar peg for extended periods (suboptimal for a stablecoin). Meanwhile, DSD’s 2-hour epochs yield high returns by expanding the supply very quickly. This leads to massive selling pressure, shorter expansion periods, and significant volatility on the downside.
Solution:
Introducing dynamic epoch lengths enables VTD to retain the benefits of long and short epochs while minimizing the downsides.
Epoch times (of between 2-6 hours) are chosen by the DAO. As VTD comes out of a debt cycle and into expansion, it would likely start at shorter epoch periods, close to the two-hour range. With shorter epoch periods, VTD will expand the supply as fast as DSD as it comes out of the debt cycle. This will enable the protocol to clear the debt owed to coupon holders quickly. However, as debt is cleared, the algorithm will slow down the rate of expansion by increasing epoch lengths (up to six hours). Note that this is similar to how the US Federal Reserve restricts the growth of money supply in periods of strong economic growth in order to smooth out volatility. Later, when the price of VTD again moves below its peg, the algorithm will reduce the length of epoch periods. This will increase the speed at which debt is issued, pushing the price back towards its peg at a faster rate. The result will be a more stable asset, which is the goal.
Yes, these are:
Calling the Advance (which moves the protocol to the next epoch) must be done manually by at least one user. To increase fairness for the Advance function, VTD integrates a Reverse Dutch auction. Under this system, the Advance function can be called anytime after the current epoch ends, but the sooner it is called, the lower the reward. Rewards for calling the Advance function start at 1VTD and climb by 1 VTD every five seconds.
VTD doesn’t believe that only the Team or Bots should be allowed to claim the Advance Rewards which is why we’re the first project to build the Advance function into the UI so anyone from the community can call it. With this feature anyone can see when the next Epoch is (remember our Epoch times are variable) and decide if it’s worth risking the gas to win the Advance Rewards lottery. VTD launched fairly with zero pre-mining. Even the Team needs to compete with the community to win the Advance Rewards.
Multiple pools of VTD-paired liquidity allow participants to provide liquidity and farm VTDs in the paired cryptocurrency that users prefer HODLing in order to minimize their potential for impermanent loss. MPL also benefits DAO bonders or VTD hodlers by bringing less slippage on exit (no need to convert through an extra crypto and suffer the additional transaction fee + slippage loss)
VTD will introduce one new pool at a time, along with an increased LP reward ratio for each new pool. The first additional liquidity pair was VTD-ETH with the LP/DAO reward ratio set at 40%/60%. The 40% LP rewards are distributed to the VTD-ETH and VTD-DSD pools based on their share of the total liquidity provided between each pool. This means that each new pool will need to compete with legacy pools for their fair share of rewards — again increased complexity that equates to more opportunities.
Following the ETH pool, VTD intends to add USDC, wBTC, USDT and possibly more. The process of determining which liquidity pools to add is community driven.
Pairing to DSD provides an important growth vector for VTD. DSD holders looking to optimize returns on their holdings may choose to purchase VTD and lock it up along with DSD in order to benefit from the liquidity pool rewards.
VTD, as a fork of DSD, works in exactly the same way as VTD except that some parameters have been changed. As mentioned, the key changes are:
Dynamic epoch lengths (between 2-6 hours)
70/30 DAO/LP reward split during expansion periods
Anti-bot Advance Feature
Advance function built into the UI, and;
Multi-pool liquidity
The VTD team is currently in the process of designing, in collaboration with community members, a coupon system that improves upon its predecessors. By learning from in-the-wild protocols (specifically ESD and DSD, but also others), VTD's coupon system will integrate a number of new features. The aim is to align incentives such that (1) supply contracts rapidly, (2) the price moves above the peg (not sure near the peg) and system debt is cleared, (3) more people participate, thereby increasing the liquidity of the ecosystem.
TWAP-based supply expansion and contraction in VTD works exactly as it does in DSD. Examples can be found here.
The protocol launched on January 5th at 14:00 UTC.
Go to the Uniswap page here.
Connect your web3 (metamask etc) wallet to Uniswap and approve the DSD tokens you wish to buy VTD with.
Enter an amount of DSD into Uniswap, and approve the transaction to buy VTD.
*Pay attention to the price and slippage as the market’s liquidity changes.
Go to the vtd.finance page. This gitbook also contains a guide for interacting with the DAO (see next).
PARAMETER
ESD
DSD
VTD
Hours per Epoch
8
2
Dynamic between 2-6 hours
APY During Expansion
Low
High
High but Dynamic
Expansion Period Length
Long
Short
Middle
Debt Cycle Length
Shorter
Longer
Middle
Dao/LP Reward Split
80%/20%
60%/40%
70%/30%
Code Base
New and Audited
Fork of ESD
Fork of DSD with Variable Epoch Periods and Anti-Bot Advance Function
Liquidity Pools
ESD/USDC
DSD/USDC
VTD/DSD, VTD/ETH, and more to come