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Table of contents
* SigmaRSV (Reservecoin) Simplified
* Overview
* SigmaUSD (Stablecoin) Simplified
* Longterm framework of SigmaUSD.
EXAMPLES
SIGMARSV (RESERVECOIN) SIMPLIFIED#
* SigmaRSV is a call option on a % of the ERG held in the reserve portion of
the SigmaUSD contract
* Fees are continually added to the ERG held in reserve as users interact with
the contract. This mechanism ensures liquidity and offers a mechanism of
return beyond trading. SigmaRSV represents a price/book (P/B Ratio) on the
ERG held in reserve.
> It is important to understand three mechanisms that influence the outcome of
> each user of SigmaRSV
1. Fees accumulate as users interact with the contract. Nothing is Free.
2. The amount of ERG held in reserve floats (up/down) as users interact with
the contract.
3. The price ERG/USD floats (up/down) as users trade ERG.
OVERVIEW#
* Imagine the Reserve amount is 100 ERG.
* Alice holds SigmaRSV, which represents 10% of the (P/B Ratio) contained in
the reserves.
* Alice's SigmaRSV position is a call option on 10 ERG (minus the exchange fee)
* Let's imagine the price of ERG is 2$.
* Alice's SigmaRSV represents 20$ in ERG (minus the exchange fee)
THE BALANCE IN RESERVE CAN GO UP
* Imagine, based on use, the reserve now holds 114 ERG.
* Alice has SigmaRSV, which represents 10% of the (P/B Ratio) contained in the
reserves.
* Alice's SigmaRSV represents a call option on 11.4 ERGs.
* Let's imagine the price of ERG is still 2$.
* Alice has 22.80$ in ERG (minus the exchange fee)
THE BALANCE IN RESERVE CAN GO DOWN
* Imagine, based on use, the reserve now holds 90 ERG.
* Alice has SigmaRSV, which represents 10% of the (P/B Ratio) contained in the
reserves.
* Alice's SigmaRSV represents a call option on 9 ERGs.
* Let's imagine the price of ERG is still 2$.
* Alice has 18.00$ in ERG (minus the exchange fee)
THE VALUE, ERG/USD, CAN GO UP
* Imagine, based on use, the reserve now holds 114 ERG.
* Alice has SigmaRSV, which represents 10% of the (P/B Ratio) contained in the
reserves.
* Alice's SigmaRSV represents a call option on 11.4 ERGs.
* Let's imagine the price of ERG is still NOW 3$.
* Alice has a call option 34.20$ in ERG (minus the exchange fee)
THE VALUE, ERG/USD, CAN GO DOWN
* Imagine, based on use, the reserve now holds 114 ERG.
* Alice has SigmaRSV, which represents 10% of the (P/B Ratio) contained in the
reserves.
* Alice's SigmaRSV represents a call option on 11.4 ERGs.
* Let's imagine the price of ERG is still NOW 1$.
* Alice has a call option 11.40$ in ERG (minus the exchange fee)
SIGMAUSD (STABLECOIN) SIMPLIFIED#
> SigmaUSD represents a call option on the dollar value of ERG held in reserve.
SigmaUSD uses Ergo's oracle pools infrastructure to calculate and adjust the
current ERG/USD exchange rate. Reserve always backs sigma USD. The price ERG/USD
floats (up/down) as users trade ERG.
BASIC OVERVIEW
* Bobs has 20 SigmaUSD, representing a 20 USD value in ERG.
* These ERGs are held in Reserve.
* This 20$ value is backed by reserves of at least
* (4x1)(80$ of ERG)(40 ERG @ $2)
* Bob at 2$ Bob can Redeem his 20 SigmaUSD for 10 ERG (minus the exchange fee)
ERG/USD VALUE DROPS
* Let us imagine the price of ERG drops from $2 to $1.
* Bobs 20$ of value is backed by at least
* (4x1)(80$ of ERG)(80 ERG @ $1)
* Bob can call 20 ERG (minus the exchange fee)
ERG/USD VALUE INCREASES
* Let us imagine the price of ERG increases from $2 to $4.
* Bob's $20 value is backed by at least
* (4x1)(80$ of ERG)(20 ERG @ $4)
* Bob can call 5 ERG (minus the exchange fee)
LONGTERM FRAMEWORK OF SIGMAUSD.#
* SigmaUSD is an essential building block for a functioning DeFi System.
* The focus for ERG now shifts to building on the foundation it has set.
* Gateways, Dex's, Liquidity Pools, LETS systems. It is time to build use and
utility.
* The importance and significance of stable value cannot be overstated.
* This is critical to the long-term prosperity of the Ergo Network and is
important to understand.
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