💡About Us

AugmentLabs has developed an anti-fragile algorithmic stablecoin ecosystem with dual tokens and an oracle:

1. AGC Token (the asset, the DAO)

2. USC (the stablecoin)

3. Automated Marketcap Comparison Framework (the bridge, the oracle)

The design of the protocol was intended to be both innovative and able to withstand attacks of any kind by addressing fundamental shortcomings of previous designs and incorporating dynamic systems that can modify the way the algorithmic system responds to an attack vector, particularly a significant depegging incident.

Philosophy 1

The AGC token ecosystem should not impose additional stress on our stablecoin, USC. This can be achieved by complementing both systems through asset collateralization (AGC) and stablecoin (USC). However, it is crucial to have the ability to disconnect during extreme situations, such as extended depegging or a market cap failure in either AGC or USC.

Philosophy 2

The stablecoin is designed to be intrinsically stable, and its top priority is to maintain its peg to the US dollar at $1.00 while remaining antifragile. In the event of a volatile market where the peg is breached, the system must identify the fair value and facilitate a smooth transition to restore confidence and ensure a swift recovery. This is where the AMCF comes into play, and its role will be elaborated.

Designing an Algorithimic Stablecoin

Envisioning a scenario of significant duress, where sell pressure is at its peak, and the AGC token price is at its lowest, we design for the worst case. This could result in the AGC(MC) approaching parity with USC(MC), testing the confidence of the system. The worst-case scenario would be a potential death spiral.

Halting Mint/Burn During Duress

The AGC protocol's design philosophies suggest that it would respond to the fair market value of USC(MC) by accepting it and potentially re-pricing USC to under $1.00, despite this not being the ideal scenario initially. It's important to note that since this is algorithmically encoded, the market would quickly adjust and accept it, which is crucial in maintaining confidence and enabling a quicker recovery, even if prices are not ideal. Ultimately, the goal is to repeg to $1.00 through market forces, which can be achieved via a DAO vote as part of the AGC token's governance.

From a technical perspective, the protocol will immediately halt minting and burning once it detects a black swan level of duress by comparing the market caps of both tokens. The ability to algorithmically address the main issue in a timely manner will allow for the longevity of the system and a rapid recovery from potential attacks.

The Automated Marketcap Comparison Framework (AMCF)

A dynamic price oracle (AMCF) should actively monitor the AGC(MC):USC(MC) ratio, and if collateralization falls below 1, it should affect the USC price to control compression, without putting inverted pressure on AGC. Additionally, 80% of USC inflow capital should automatically go to a collaterized insurance fund that supports AGC and not USC, prioritizing the key system under duress (AGC) and preventing a catastrophic collapse in the stablecoin.

A hardcoded $1.00 peg assumption is a mistake that AugmentLabs seeks to change. Temporarily changing the peg to a lower impermanent price would not alter the current system but could stress the sell side of investors. However, investors may be incentivized to buy more USC at the lower price, knowing that the system would return to the default peg setting of $1.00, and that the current situation was planned for and is likely a reaction to a black swan event. This could be seen by investors as an opportunity rather than a problem, enticing more liquidity.

With the combined halt of mint/burn, a predictable marketcap of both systems running parallel, and the continually enticing APR, during periods of duress, the price of USC would start recovering and would likely strengthen its position in an effort to benefit from the inversion, which would be rare, but still a pre-planned event. Such crashes could potentially turn into flash crashes, as professional market makers would be most likely to seize the opportunity.