Thread by @evankuo

Today we will be launching SPOT, an inflation-resistant stable asset designed to operate under all market conditions that can safely wind down to zero users without bailouts.

SPOT reflects our work on stablecoin designs over the past 4 years 😅

vimeo.com/manage/videos/…

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From the outset we wanted to create something durable and purposeful. For this reason, the table stakes were always that "it can't target a fiat currency and it can't be destined to break by economic design," thereafter the more stable it is the better.

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These are values we carried from the design of AMPL (an inflation-tracking unit of account) into the design of SPOT (an inflation-resistant store of value).

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At the highest level, SPOT is simply a token that represents a freely redeemable claim on a basket of assets on-chain. A holder of 1% of SPOT supply can redeem at any time for 1% of its collateral.

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This means the price of SPOT can float. If the value of its collateral increases, we expect the price of SPOT to increase because it is redeemable for more. If the value of its collateral decreases, we expect the price of SPOT to decrease because it is redeemable for less.

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No price point in the space of SPOT values can cause the system to suddenly break or change behavior because it's just a proportional claim on a basket of assets.

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For this reason, catastrophic outcomes like "peg-breaking", "cascading-liquidations", and "liquidity crunches", do not apply—much as they do not apply to Uniswap-V2 LP tokens.

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However, due to the unique way in which collateral is prepared and rotated in the system, the price of SPOT tends towards 1 CPI-adjusted dollar.

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The SPOT whitepaper 1) details how collateral is prepared and rotated in the system, 2) explains why this results in the value of SPOT claims tended towards 1 CPI-adjusted dollar, and 3) outlines a system of rotation incentives.

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There will be many more materials to come. I think you'll find that SPOT's design is radically different from current-generation systems.

Please give it a read!

drive.google.com/file/d/1MTp3vG…

😀