{"type": "project", "title": "Lords of Finance", "logoImg": "bafkreib5rjtr4h3tqamuuiwkvlkfvqtgnm4dg2wpqkautslyppa5gl3ptu", "website": "https://lords.finance", "createdAt": 1717471074815, "userGithub": "lllach", "credentials": {}, "description": "(The white paper in the web is a better explainer).\n\nThe main aim of Lords of Finance is to solve the problem of the completely decentralized stablecoin/stable-assets, a Holy Grial of crypto which hasn't been solved yet. (DAI, for example, is heavily centralized with USDC).\n\nThe medieval gamification aspect makes the scheme more understandable and fun. Also, many aspects make historical sense: \"seignorage\" is a medieval term, \"SolidUS\" and \"Ecu\" are both medieval/Roman coins and good names for dollar and euro stablecoins (ECU was also the European Currency Unit in the 1980s, predecessor of the euro). And the governance system through a King (founders) and a Parliament (equity owners, holders of the \"Florint\" token) with cross-veto powers makes administration easier and still decentralized, as a majority of equity holders can block any change. And can even organize a \"Revolution\" which makes the system completely aristocratic (vote according to stakes).\n\nThere are three unique aspects that help attain, as the project states, \"stability in an unstable world\", ie., a completely decentralized platform for the creation of stable assets/coins in a cryptoworld where instability tends to be the norm.\n\nOne is the notion \"cooperative-competitive collateralization\" (CCC). The mechanism is cooperative because the minting/burning is done at a systemic level, not at each \"castle\" (vault). But the distribution of seigniorage-generating activities works through individual incentives: Lords earn more seigniorage the more collateralized their castle is. Competition for rewards should lead to comfortable collateralization ratios. An aristocracy of \"Knights\" (Lords owning castles with the highest collateralization ratios) earn extra rewards for example when weak castles are liquidated.\n\nSecond: collateralization and minting are separate activities. You can help collateralize the system without doing the minting yourself, by just staking WETH in your castle as a Lord; and you can mint/burn without being a Lord (\"merchants\" do this). Minting and buring are done through an orderbook system where there is a permament offer of Solidus at USD 1.005 worth of WETH and a permament bid for Solidus at USD 0.995 worth of WETH. This keeps the market price of Solidus (SUS) close to parity. Rewards from the system are distributed not only to Lords but also to the owners of Florints, the equity token.\n \nThird: paradoxically, the most problematic case is not a fall in the demand for the stablecoin, as a currency run in an overcollateralized system actually *improves* the collateralization ratio. The main challenge is an excess demand for the stablecoin without a proportionate increase in the supply of collateral. While incentives given by CCC should be sufficient, there's a backup \"Templar\" mechanism through which speculators (\"Templars\") can borrow Solidus (the stablecoin) from the King at negative dollar interest rates when and if the Solidus is above parity. \n\nA Uniswap integration is used to give more liquidity to the equity token, in a subsidized manner, through a system of \"matching funds\" in which the King freely provides funds to Lords willing to invest in the Liquidity Pool, particularly for the Florint/WETH pair.\n\nFinally, there are many gamification aspects that will be added to the system (eg., contest, prizes, castle competitions, etc), but the essence is the collateralization aspect in which all actors earn rewards. ", "logoImgData": {}}
Lords of Finance
(The white paper in the web is a better explainer).

The main aim of Lords of Finance is to solve the problem of the completely decentralized stablecoin/stable-assets, a Holy Grial of crypto which hasn't been solved yet. (DAI, for example, is heavily centralized with USDC).

The medieval gamification aspect makes the scheme more understandable and fun. Also, many aspects make historical sense: "seignorage" is a medieval term, "SolidUS" and "Ecu" are both medieval/Roman coins and good names for dollar and euro stablecoins (ECU was also the European Currency Unit in the 1980s, predecessor of the euro). And the governance system through a King (founders) and a Parliament (equity owners, holders of the "Florint" token) with cross-veto powers makes administration easier and still decentralized, as a majority of equity holders can block any change. And can even organize a "Revolution" which makes the system completely aristocratic (vote according to stakes).

There are three unique aspects that help attain, as the project states, "stability in an unstable world", ie., a completely decentralized platform for the creation of stable assets/coins in a cryptoworld where instability tends to be the norm.

One is the notion "cooperative-competitive collateralization" (CCC). The mechanism is cooperative because the minting/burning is done at a systemic level, not at each "castle" (vault). But the distribution of seigniorage-generating activities works through individual incentives: Lords earn more seigniorage the more collateralized their castle is. Competition for rewards should lead to comfortable collateralization ratios. An aristocracy of "Knights" (Lords owning castles with the highest collateralization ratios) earn extra rewards for example when weak castles are liquidated.

Second: collateralization and minting are separate activities. You can help collateralize the system without doing the minting yourself, by just staking WETH in your castle as a Lord; and you can mint/burn without being a Lord ("merchants" do this). Minting and buring are done through an orderbook system where there is a permament offer of Solidus at USD 1.005 worth of WETH and a permament bid for Solidus at USD 0.995 worth of WETH. This keeps the market price of Solidus (SUS) close to parity. Rewards from the system are distributed not only to Lords but also to the owners of Florints, the equity token.
 
Third: paradoxically, the most problematic case is not a fall in the demand for the stablecoin, as a currency run in an overcollateralized system actually *improves* the collateralization ratio. The main challenge is an excess demand for the stablecoin without a proportionate increase in the supply of collateral. While incentives given by CCC should be sufficient, there's a backup "Templar" mechanism through which speculators ("Templars") can borrow Solidus (the stablecoin) from the King at negative dollar interest rates when and if the Solidus is above parity. 

A Uniswap integration is used to give more liquidity to the equity token, in a subsidized manner, through a system of "matching funds" in which the King freely provides funds to Lords willing to invest in the Liquidity Pool, particularly for the Florint/WETH pair.

Finally, there are many gamification aspects that will be added to the system (eg., contest, prizes, castle competitions, etc), but the essence is the collateralization aspect in which all actors earn rewards. 
Lords of Finance