Fancy an over-collateralized stablecoin that generates inflation-beating yield? A transparent stablecoin that strives to responsibly maximize wealth through the distribution of real estate rental income? A stablecoin you can be excited about?
USDR is a yield-generating stablecoin backed by real estate 🏡 that preserves wealth 💰 and beats inflation 📈 through daily rebases 📅 from rental income 🏦 (1 USDR = 1 USD).
USDR = better money.
It is the brainchild of Tangible, another project I feel has great long-term potential and that has demonstrated excellence in communication, design, technology and user experience. Tangible believes in reducing financial inequality by democratizing access to growth assets, assets that are only usually available to people of high net worth e.g. fine wines, gold, watches and of course, real estate.
USDR = a better future.
As a stablecoin that is primarily backed by real estate, USDR could be the solution to many of the problems of “money”.
Let's take a closer look…
What is money?
Money is something we think about a lot. However, beyond earning it and spending it, most of us don’t consciously think about what money actually is or does.
Before we can fully understand the value of USDR and the problems it solves, we first need a basic understanding of what “money” is and the core attributes of what a “good money” should be. There are three main attributes to consider:
- A medium of exchange: “money” should be a common medium that enables people to trade or exchange anything with it.
- A store of value: “money” should be capable of being stored to spend later and the value of what “money” can purchase should be known.
- A stable unit of account: “money” should enable items and services to be accounted for and compared based on their individual and collective “monetary” values.
A world without money
If you think about it, without “money”, the world would revert back to the old method of bartering; exchanging things and/or time. This isn’t a bad thing, but it requires the people ‘trading’ each to have something the other wants. Not exactly convenient.
Without money, it would be impossible to account for, track and compare values, especially across multiple items. Needless to say, it would be very difficult to accumulate and store value; not everything is designed to hold value over time, especially time itself!
Over years, many things have been used as “money”, from shells, animals and salt to teeth and tobacco. As we evolved, precious metals became the main currency used by most communities around the world, eventually being held by banks who issued paper notes and coins based on what they held in their reserves aka treasury (mainly gold and silver).
In theory, you could take your bank note into the bank and exchange it for the precious metal value it represented. This is often referred to as the ‘gold standard'.
Then fiat currency was born; the promise or collective agreement of a government to issue “money” without any backing. How fiat currency works is too much to cover in this article, but essentially the ability to increase or decrease the supply of fiat money is in the hands of our governments.
Which leads me to touch on inflation.
Inflation is when it takes more money to purchase the same items or services…
The big problem 💰
The biggest problem with fiat currency (and thus stablecoins pegged to it) is the continuous loss of purchasing power, aka inflation.
Globally, fiat currencies lose value (purchasing power) every year.
The purchasing power of $1 in 1972 was worth the equivalent of just $0.14 in 2022 😱.
Spoiler: during almost the same period, 1972-2022, the average price of a house 🏡 increased from $29K to $514K.
The USD is viewed as the reserve currency of the world and over the past 50 years the purchasing power of the USD has reduced six-fold; data analyzed by Finbold indicates that if in 1971, the value of one dollar was $1, fifty years later, by 2021, it had declined by a 85% to be worth the equivalent of just $0.15.🤯
That is a horrible image!
However, the scarier thing is that since around 2007/8, the US has been printing more money, even moreso in recent years due to COVID😬… check this out:
Yeah, that's a helluva increase 2020-21!
According to some sources, 80% of all USD in existence were created in 2020 and 2021 😱🤯 (which seems likely looking at the chart above!). And an increase in the supply or printing of money can cause even more inflation. If you’d like to know how/why, read this.🤔
So inflation / decrease in purchasing power is a BIG PROBLEM for anyone holding fiat….we're already feeling it in our pockets and there's a good chance it's going to get worse over the year ahead (time of writing is August 2022).
Naturally, all stablecoins that are pegged to the dollar (or any other government-issued currency) inherit the problem of inflation.
However, stablecoins also have additional issues to consider, the main one's being; technical/security, as exists for all tech projects; various economic considerations that most cryptos face; and the ‘stablecoin trilema', a problem specific to stablecoins.
The stablecoin trilema states that out of these three attributes, a stablecoin can only have two:
- Scalability (ability to grow and serve a large, fluctuating audience)
- Peg Control (ability to stick to it's peg, the USD in this case)
- Decentralization (transparent & not under any individual control)
We won't dig into that here, but the stablecoin trilema worth having some understanding of. It is a problem many gigabrains have been working on to try and overcome. Read more on fluid.ch.
Without diving in too deeply, stablecoins are “pegged” to the USD by three main methods, each trying to tackle the trilema problem in their own way.
Some are centralized and fully collateralized by USD, such as USDC and USDT* . Then there are decentralized hybrid stablecoins, the main one being DAI which is overcollateralized using various cryptos and is algorithmically pegged. Finally, we have stablecoins that are pegged purely (or very heavily) by algorithms, the biggest being FRAX and, until recently, USDT which crashed with LUNA in April 2022.
* USDT, aka Tether is rather controversial in how (if!) it is actually fully collteralized. Too much drama to get into here – if you’d like to learn more start with this Bloomberg piece.
These problems lead us to ask:
- How can we have a functional “money” that preserves wealth, rather than loses it?
- How can we ensure fair access for all?
- How can we create a stablecoin that people can rely on and trust?
The solution 🏡
USDR: a yield-generating, cross-chain stablecoin backed by real estate 🏡 that preserves wealth 💰 and beats inflation 📈 through daily distribution of rental income 🧾to stakers.
All this, whilst maintaining a 1 USD peg 🏦 for usability and being available globally 🌍 across payment processing networks 💳.
Why stakers? Why not rebase direct to wallet for all holders? Many platforms and exchange do not accept rebasing tokens and USDR intend on listing in multiple locations. eg. they already use Uniswap v3 (which does not permit rebasing tokens).
The solution in pictures
The USDR team have published some pretty cool graphics on Twitter recently to promote some of the benefits of USDR…
USDR is a stablecoin that is backed by real estate 🏡; something that has been shown to be one of the most dependable asset classes to appreciate over time. It is a stablecoin that cannot simply be “printed” out of thin air and for which the value and assets can be verified.
And yes, real estate can go down – I know this only too well having bought in 2007/8 🤦♀️. However, as you can see from the ‘Average Sales Price of Houses Sold for the United States' chart below, overall property goes up. And during that time, rental property also yields income.
So, whilst the purchasing power of the US dollar fell 85% from 1972 to 2022, the average house price rose X17.5, from $29,000 to $514,100.
Imagine if you had a money whereby it's purchasing power aligned with house prices 🤔...
Furthermore, by “pegging” USDR to the US dollar, making it cross-chain and partnering with payment processors, USDR ensures it can be both easily exchanged and used as a stable unit of account.
Whilst easily exchanged, fiat, government-printed monies very much fail at being a store of value and thus a stable unit of account.
This new world money solution, $USDR, comes from Tangible who are already active in the world of real estate and digitization of ‘tangible’ stores of value via their TNFT marketplace and the $TNGBL token. They use blockchain in ways that support real-world value have proven themselves to be professional and user-centric
How does USDR work?
USDR uses the existing Tangible tokenized real estate system (TNFTs) to purchase and manage rental properties which are used as the primary backing / collateral of the USDR token.
1 USDR = 1 USD
These rental properties provide income for the treasury that enable them to mint more USDR…
This minted USDR is distributed to stakers at an estimated yield of 8-10% APR. #RealYield
In addition to real estate, USDR is also collateralized by DAI and, to a much lesser extent, TNGBL.
To begin, there will be a much higher percentage of DAI than real estate. Once the value (equity) of the real estate increases, the percentages adjust accordingly.
USDR treasury allocation & collateralization
The treasury is designed to become 130% over-collateralized via the following assets;
- Real Estate: 50-80% (increasing over time as liquidity improves)
- DAI: 10-40% (varies based on the increase in real estate backing)
- TNGBL: 10% (variable – only available if treasury has 90%+ of other assets)
*Final allocations to be confirmed pending completion of quantitative analysis and stress-test modelling.
USDR will maintain its pegged value and increase its market cap by becoming overcollateralized as the properties in the treasury increase in value and new tokens are minted.
Once the treasury reaches its goal of being 130% overcollateralized, through increase in property values, any further appreciation in value will be minted to USDR and distributed to stakers via a daily rebase. Thus further increasing the market cap of USDR.
During the initial release phase, when the ratio of real estate is low and thus rental income is low, subsidies (incentives) will be provided by Tangible Labs to ensure a yield of +8%. This will last until the USDR market cap reaches somewhere between $500M and $1B.
The following images provide some example figures of where the yield provided to stakers comes from at Low, Medium and High ratios of Real Estate (RE) during both the initial (incentive) phase and after 130% over-collateralization has been reached.
As you can see, when there is a lower ratio of Real Estate (RE), we can expect less of the yield to come from RE and in the early stage incentives are used to boost the total yield to stakers.
Why DAI? 🤔
Whilst there are limitations to decentralization when dealing with real world assets, USDR’s aim is to be as decentralized as possible; your tokens/yield will always be in your own wallet.
Decentralization is one of four primary reasons DAI was chosen as USDR's stable partner.
- Decentralized: much less of the risks associated with centralization*.
- Transparency: real-time access to collateral assets, stats and smart contracts.
- Collateralization: varied assets, and a high ratio for loan liquidation.
- Pegging stability: has been shown to maintain it’s peg through extreme volatility.
USDR can always be exchanged 1:1 for DAI.
One of the reasons DAI forms part of the backing is for liquidity reasons.
* Note that whilst DAI is decentralized, it holds centralized assets in its treasury as collateral. Like any USD-pegged stablecoin, it faces the stablecoin trilema (Scalability, Peg Control, Decentralization — choose 2); DAI holds a substantial sum of the centralized stablecoin USDC.
Trust and ownership
USDR will always be overcollteralized and will not take on unacceptable risks simply to boost yield and generate ‘degen' headlines. Instead, USDR will generate sustainable yield through real, transparent revenues.🏡💵
Holders will never have to deposit their tokens in a centralized system to earn yield. They will aways have full custody of their assets in their own wallet.
And, although there are limitations due to the ‘real world' nature of operations, USDR aims to be as decentralized as possible.
What happens if property prices go down?
If collateralization falls below 100% then the rental yield (that usually goes to stakers in the form of USDR) will temporarily be used to purchase more properties…
….increasing the treasury collateral until it is 100%+.
The risk of this happening is in the earlier stages of USDR, when the real estate is newly purchased or during/after a crash, hence the variable ratio of ‘DAI to Real Estate' within the treasury.
You can find out more about the purchasing and appraising process here: https://docs.tangible.store/usdr/purchasing-and-appraising-properties
How you can earn more 🚀
*** This bonus launch referral system has been delayed until mid-September ***
To assist in getting the word out during their launch phase, USDR has created a 2-way affiliate system. What that means is that if you mint USDR via a referral, YOU will get an additional reward too (not just the person who refers you).
- An affiliate gains 4% on any mint via referred staking for 7+ days.
- A referred user gains 1% on anything they mint via staking for 7+ days.
Affiliates can NOT use their own link, however they can use someone elses to gain the extra yield.
For example, if an affiliate refers a user who mints 1,000 USDR, the affiliate receives 40 USDR and the user receives an additional 10 USDR. The entire affiliate program is on-chain for transparency.
I’ve been a Tangible fan since the beginning and am very positive about the future of USDR. If you would like to use my link and earn an extra 1% for 7 days staking, I'll share it here when I get it ( the program is not quite ready yet).
Meanwhile, why not go and give USDR minting a try?
Head on over to: https://www.tangible.store/usdr, ensure you have some DAI on Polygon network and get your hands on USDR. Maybe swap it back again too, just so you can see how easy it is!
*** This bonus launch referral system has been delayed until mid-September ***
How to mint and stake USDR
For anyone familiar with minting and staking, there is nothing unusual. As always, you will first connect your wallet to https://www.tangible.store/usdr. Then the usual permissions and actions…
- Connect wallet
- Give permission to use DAI
- Use DAI to mint USDR
- Give permission to use USDR
- Stake USDR
After connecting your wallet, give permission to use your DAI…
And whoop! That's it done 🙂
Let's round this rather lengthly post up with the USDR vision and mission statement…
USDR vision: Better Money
With the unprecedented printing of fiat currencies from thin air, “money” as it is no longer serves the people. The effects of inflation and reduced purchasing power are impacting on quality of life.
USDR's vision is to become the ultimate “money” utility asset.
One that combines stability and growth through real estate with the functional use and operability of USD.
Their vision is to be more functional than any existing money: A currency that can be used anywhere and by anyone across multiple chains, L1 and L2 and across a network of payment and processing channels.
I'm going to close out with Tangible / USDR's mission statement, which I think you'll agree is pretty damn awesome.