This article outlines the changes Charge DeFi will implement to the core protocol and the reasoning behind it. Charge DeFi will be moving from a 3 token ecosystem to a 2 token system with the removal of $Pulse. The team will use a $500,000 cash injection from the team wallet to bootstrap the shift to an ecosystem without $Pulse.
Charge DeFi evolved from the cumulative experience of the development team participating as active team members or investors in a variety of Defi projects, with a focus on algorithmic/elastic supply tokens. The classic model is a three-token system — seigniorage (or share) token, dollar token and a bond token. At some point all projects lose peg (when the dollar token dips under the set value) and the seniorage token stops printing or yielding rewards. The bond token becomes available as a means to return to peg and either peg is achieved and printing resumes, or more often than not, an endless cycle of trying and failing to reach peg while accumulating debt occurs. When debt is occurred in an ecosystem like this, it must be paid back, just like in your day-to-day life. The more debt to be paid back, the less meaningful your “paycheck” is from staking the seniorage share.
Instilling the rebase mechanism when the dollar token is below peg is Charge DeFi’s answer to avoiding the endless spiral sub-peg. Rebase is a more drastic measure in which supply is reduced If TWAP of Static drops below $0.8 at the end of an epoch, or if TWAP of Static is below its $1.0 peg at the start of the 6th consecutive epoch (8 hours per epoch). Lowering the number of tokens in circulation increases the price of Static by the same factor. It has a more severe impact on investors but is a lightening quick way of getting back over peg.
We added the Pulse token in to assist in recovery when peg is lost and to give investors a way to still farm and yield under peg. What we learned over the past few months is that having two methods to recover from being under peg seemed to only split investor efforts making neither one as effective as it should be. Investors buying the Pulse token were often frustrated by not being able to redeem for as much Static as they wanted to each epoch. Some dumped the redeemed Static immediately causing the price of Static to continue to decrease. Those who didn’t buy Pulse were frustrated at the accumulated debt the entire community would have to pay down before resuming full staking rewards, leaving them less incentivized to invest.
Our team focused on finding a solution that would make a significant and lasting impact to present to the community to vote. Our primary goals were to:
· Reduce debt to something more manageable for the community to pay off
· Increase APRs to be more attractive to current and new investors
· Simplify the decision making process when under peg so community decisions would have clear direction and impact
These are the issues that were assessed:
· Pulse being redeemed for Static that is subsequently sold causing a decrease in price
· Pulse holders frustrated at how long it’s taking to redeem Pulse
· Investors frustrated by debt amount and % of expansion to pay back debt
· Marketing to new investors while carrying almost $1 Million in debt
· $Pulse has an almost negligible impact on the price of static but creates future debt
The following information was posted on January 26th, 2022 on our Telegram and Discord pages for the community to discuss and vote:
The community voted to remove Pulse and all the subsequent steps that were outlined in the vote above. The biggest mover was deciding that we could and should offer, as a Team, a contribution of $500,000 BUSD from the team wallet. This was done to bootstrap the debt repayment in a way that wouldn’t impact the price of $Static.
The Charge DeFi team has already reduced the % of expansion dedicated to Pulse to 5%, as well as reducing the percentage of expansion dedicated to the team wallet to 5% per epoch. We will be releasing a Pulse Swap Pool during the week of January 31st, 2022 for investors to swap up to a certain percentage of their Pulse for BUSD at a $0.90/$1.00 ratio. The remainder of Pulse will be redeemed the traditional method (per epoch) and the Swap Pool is not mandatory. For investors deciding to not use the Swap Pool, they will redeem their full amount per epoch for Static.
Our work continues at Charge DeFi, from expanding our marketing reach to relatively untapped areas like Asia to ongoing partnerships with top YouTubers and TikTok stars and our core team’s tireless work on building Money Legos and our P2P crypto wallet.
As long-time investors ourselves, we are familiar with the cycle of emotions that a down market can bring. We also know, more importantly, the power of building. Market is up? We build, Market is down? We build.
Our only ask of you is to continue sharing, engaging, retweeting and being an active part of our growing community!