5. IADD Network
A Combination Network of Decentralized Exchange and Payment Network
- Automatically deploying a decentralized exchange
- Automatically deploying a decentralized payment network.
The IADD network is a perfect combination of them.
"Natrural DAO" is a philosophical thought from the Tao Te Ching, meaning that the law reflected in everything is "Mother Natural". IADD is runing based on decentralized rules.
To build a functioning decentralized world driven by blockchain it is critical to establish various "rules" and "laws", which the most important ones are smart contract standards
After the outbreak of ICO, we quickly discovered that there were various problems. One of the problems is the lack of a uni-exchange based on decentralized blockchain technology.
Currently there are three popular ways to list and trade a token.
- Listing and trading a token in a centralized exchange e.g. Binance.This is a traditional way which is both centralized and the least cost-effective. A token issuer has to pay huge commissions including a "listing fee", "service fee", "token price bolstering fee" etc to an exchange.Quite often this hurts a token issuer's interests and hurts investors' interests as well, which we all witnessed in 2018's market crash.
- Listing and trading a token in BancorAlthough Bancor doesn't charge a trading fee, means it still charges a token issuer a listing fee. A token issuer has to buy equivalent BNT as a reserve to build a trading pair with its token. This is an alternative listing fee a token issuer pays as a pledge, and as long as the token issuer wants to trade its token in Bancor this pledge can never be revoked. In addition the trading price of a token paired with BNT suffers from BNT's price volatility.
- Listing and trading a token with Uniswap exchange protocolThis way a token issuer no longer relies on a single entity to provide liquidity. But in this case people who provide liquidity (trading pairs) may lose money therefore active trading of a token needs willing people to provide liquidity. Without those people a token issuer has to jump in and provide liquidity to bolster trading. This would result in possible collusion between a token issuer and liquidity providers or manipulation of market by liquidity providers, and they might gradually, naturally and eventually be in cahoots with each other.
- According to DAism's Circulation Token Protocol, all tokens of every DAO initially supply the IADD network.
- Like Uniswap we use a similar but improved CPMM algorithm to determine a real-time decentralized trading price for any EIP-3712 token that is listed and traded in IADD network. Unlike Uniswap or Bancor we use exactly the same volume of issued token as the base, and we don't use ETH or BNT, whose prices in USD fluctuate hugely, to form a trading pair but use a Unit Token(uToken) instead.
DAism's solution doesn't need any party especially a token issuer to spend money and resources to bolster trading, while bearing a huge risk of losing money. In our solution right after the very first token's issue completes (by the plateform DAism), this token will be automatically listed on IADD Network. You can then buy or sell the token in IADD. IADD is both a Uni-exchange and a Uni-payment Network.
The Unit Token, uToken, is issued by IADD utilizing a decentralized and decensored mechanism. uToken's base price is defined as vita. Therefore adoption of uToken has big potentials to turn blockchain technologies into real popular applications.
Constant Product Market Maker is a model of market maker and generates token pricing in a non-linear way. CPMM is used by Uniswap, and we have imporved it.
IADD Smart Contract. It is a set of smart contracts which work similar to Bancor and establish a decentralized exchange protocol for ERC20 tokens.
IADD Exchange Protocol. It is a decentralized exchange protocol.
Unit Token, uToken
It is a Unit Token issued by ISC.
IADD Network(Instantly and Automatically Deployed DeSwap Network)
A decentralized swap network that is instantly and automatically deployed.
- 1.Unit Token Protocol See below.
- 2.Circulation Token Protocol(Protocol of Token's Circulating Supply) 见“道易程协议”部分。
- 3.Dex Protocol After all the tokens are issued to the IADD network, they become reserve coins. The reserve token realizes value discovery through automatic calculation and provides liquidity for the market, regardless of the size of the transaction. This is a revolutionary agreement, because the decentralized trading network built on it does not require and does not allow anyone to participate in liquidity!
- 4.Decentralized Payments Protocol This protocol closely cooperates with Circulation Token Protocol and Decentralized Autonomous Fund Protocol. The key point of this protocol is to provide a payment interface: If a DAO's token is A, when it sells products or services, no matter which token the consumer uses to pay, the DAO will get A. Yes, if consumers use any of other tokens to pay, there is an automatically convert triggered through the IADD network and the DAO will be paid by A. If a DAO does not issue a token, no matter which token the consumer uses to pay, the DAO will receive uToken. The mechanism is similar to the first case.
In this protocol, the pricing standard is uToken, and the basic price unit is vita, which means that the price of a uToken is defined as 1 vita. uToken's precision is 18 bits. The issuance mechanism of uToken is named as ETH Forge.
Name: Unit Token
Basic Unit: vita
1 vita = 100 cent
This section requires you to understand Uniswap's constant product formula(automated market maker algorithm) in advance. Please refer to the following information for details.
And the discussion initiated by vitalik Buterin: Improving front running resistance of x*y=k market makers
Issued by an ETH FORGING model, uToken will temporarily be 1:1 pegged with the US dollar. Its demicals are 18. uToken's issurance mechanism is as follows:
We introduce a Reverse Improved CPMM algorithm to initialize the system with ETH's circulating supply, and market cap.
- 1.We introduce a Reverse Imporved Constant Product (RICP) algorithm to initialize the system with ETH's circulating supply, market cap and uToken's defined price unit (1 vita).
- 2.After an ETH supply and an uToken supply are obtained the product of the two crypto supplies can be composed.On system initialization, and ETH's real-time market cap will be used as the system's initial uToken supply.
- 3.ETH Forge algorithm: Reverse Imporved Constant Product (RICP, or RI-CPMM) algorithmIADD network still use Uniswap's Constant Produc fomula:A * B = KThe tokens' amounts are not the ones inside the pool but outside the pool:Initially, A is the total amount of ETH which has been issued by Ethereum. and B is the amount of uToken, which is equal to ETH's volume.
- 1.Trading Market That Reflects Real Demand: When a DAO created, DAism issues its tokens according to Circulation Token Protocol at the same time, and all of them will be supplied to the IADD network.A common issue that both Bancor and Uniswap face is that there are insufficient tokens in their reserves. This leverages price vibration and results in relatively large price fluctuations when trading volumes go slightly higher. Our solution injects an ICO's full token amount into the decentralized exchange and reflects the market's real demand. Only based on this liquidity will a token's pricing be rational and reasonable.
- 2.This mechanism has the following advantages:
- Every DAO's token is issued diretly to IADD newtwork, initially there is no Token allocate to the DAO. Thus the IADD Network prevents a token issuer from dumping his tokens for uTokens. There are cases in which a token issuer issues a worthless token and dumps his holding (maybe up to 80 or 90 percent of the total token supply) for valuable tokens such as ETH and stable coins etc right after his token is listed for trading.
- There are cases in which right after a token is listed for trading some investors collude with the token issuer to firstly beat down the token price by dumping their holdings and then buy back at a price even lower than the ICO price. The IADD Network prevents this from happening. For instance in this system after token ABC is listed for trading if no one buys ABCs none of the existing ABC holders can sell their ABCs, because there's no uToken on the trade pair, it only exists in the Improved CPMM (only a number for the algorithm). This drives all investors to investigate deeply an ICO project before he makes an investment decision.
- The above points can be viewed as a result of regulations to token's issue.
- This mechanism prevents a token's price from dropping below its ICO price therefore protects investors, who bought the token on IADD, from suffering huge losses due to price diving which often happens in all existed exchanges and could cause a token's price to lose 90% to 95% percent after that token is listed for trading.
- Signals an alarm for a dying token--- In a traditional crypto exchange or decentralized exchange such as Bancor and Uniswap etc a token's price can go down infinitely. It is hard to judge whether or not a token/project's development is still on track. In the IADD Network when a token's price goes down to its initial price, nobody holders it. It might mean this DAO is totally discarded by the market. This signals an alarm that this token/project may have problems. If a token's price remains at the ICO price for a long time, e.g. 1 year or even longer, this signals an alarm that this token/project may fail.
- There are cases in which a token/project's development is not recognized by the markets and its price is beaten down to its ICO price but its team is striving to revamp its development. In this case although the token's price is too low for its holders to sell it, its team may still have chances to save the project by delivering good service and product. Once its service and product are recognized by the markets again the token's price will go up again.
- 1.Instant DeploymentRight after an ICO succeeds its token will be listed and traded with the stable coin uToken or any ERC20 tokens that are available for trading in IADD network.
- 2.Automatical DeploymentA token's listing and trading are managed and automatically deployed by smart contracts.
- 3.Unattended exchange and payments network All existing decentralized exchanges need many users to support its running. The innovation of IADD is of great significance!
- 4.Eliminates possible privileges multiple parties have in Centralized ExchangeIn a typical centralized exchange a token issuer, the exchange and possible bankers may collude with one another to manipulate the token's price.Our proposal elimiates these parties' privileges and possible collusion, and dismantles human interference in trading.
- 5.First Ever Decentralized Model for Token Pricing with Stable CoinTrading of a token in Bancor or Uniswap is paired with BNT or ETH. In either case when BNT or ETH's price fluctuates hugely a token paired with it is affected by the price fluctuation as well. For example when a project's development is well on track ideally its token would in general be traded at a stable price in fiat currency. But when the token's trading is paired with BNT or ETH its price in fiat currency might fluctuate as BNT or ETH's price in fiat currency fluctuates. This price volatility would fuel speculation rather than encourage application in business and economy.
- 6.Brings Applicable Stable Coin to Blockchain Based ApplicationsThe best and most popular application of a stable coin is in retail (e.g. e-business), micro payment and etc. IADD provides the most critical part of the payment for the blockchain, that is, stable coin uToken with absolutely solid price.
- 7.Rational Pricing ModelIn Bancor the base token is BNT and in Uniswap the base token is ETH. Both BNT and ETH belong to stakeholders or token issuer. In Bancor the real maximum reserve a token issuer can provide is about 5%(Bancor's recommended value) of the total supply. Even with the maximum reserve a token's price volatility is still huge. This volatility is nearly 20 times the volatity which trading with a token's total supply would generate(More details will be added for this later).In our proposal when a token's ICO succeeds the equivalent amount of the token issued for the ICO will be issued and transferred to the exchange. Those additionally issued tokens and don't belong to any stakeholders or token issuer and cannot be taken out from the exchange without trading. Therefore pricing of a token in the exchange reflects real trading's demand and supply. This pricing model is rational and reasonable
- 8.Zero Cost for Token Listing, DAO Loves ItOur proposal brings great interests to a token issuer by eliminating the aforementioned huge costs and building confidence in both the token project and the token issuer. Token issuers would love this proposal.
- 9.In addition to being applied to the investment market, it also enables blockchain payment. Because the price of uToken is absolutely constant, the pricing and consumption payment of products and services have a solid and reliable foundation.
- 10.Adhering To Blockchain's Core ValuesOur proposal is completely decentralized and censorship-resistant.
- 11.It might a mechanism to phase out failed dAPPs.