CNYT Whitepaper v1.0

CNYT is a decentralized stablecoin pegged to the Renminbi (CNY), collateralized by ETH with a minimum collateral ratio of 110%.
The protocol core is a minimal fork of Liquity v1: non-upgradable, governance-free, no admin keys; the main changes localize the price feed to support ETH/CNY pricing and risk control.
JIAOZI is the incentive and fee-sharing token: fees are shared via staking and used for community incentives; total supply capped at 100,000,000.
The peg is maintained by a combination of redemption and dynamic fees, while the Stability Pool and Recovery Mode strengthen resilience.

Stable-value assets are essential to Ethereum applications; most mainstream stablecoins are centralized.
Truly decentralized CNY stablecoins are nearly nonexistent; CNYT fills this gap.
Goal: usher in a decentralized era for CNY and help globalize the flow of real-world assets.

Non-custodial: all funds are held and managed by smart contract algorithms.
Immutable: contracts are non-upgradable after deployment, with no admin keys; rules are fixed.
Algorithmic: fees, liquidations, and redemptions are fully algorithm-driven, without human intervention.
Permissionless access: any team can build a front end to participate and earn rewards, enhancing censorship resistance.

Trove (Vault): users collateralize ETH and borrow CNYT; minimum collateral ratio 110%.
Stability Pool: deposit CNYT to absorb liquidation debt and earn ETH liquidation proceeds and JIAOZI rewards.
Redemption: exchange CNYT for ETH at par value, with dynamic fees to maintain the peg and curb short-term volatility.
PriceFeed: localized ETH/CNY support with dual oracles, a state machine, time windows, deviation thresholds, price guardrails, and lastGoodPrice fallback.
CommunityIssuance: algorithmically issues JIAOZI to Stability Pool depositors and front ends.
Staking (JIAOZI Staking/LP): in the early stage, additional incentives may be provided for CNYT/ETH LP or JIAOZI staking (per deployment parameters).

Borrowing: users open a Trove, collateralize ETH, and borrow CNYT; minimum collateral ratio is 110%.
Liquidation: when a Trove’s collateral ratio falls below 110%, liquidation is triggered; its debt is absorbed by the Stability Pool, which receives the ETH collateral as compensation.
Recovery Mode: when the system’s Total Collateral Ratio (TCR) < 150%, specific operations are restricted and liquidation priority changes to improve overall collateralization.

Redemption: users can redeem CNYT for ETH at par (x CNYT for ETH worth x), paying a redemption fee.
Dynamic fees: the base rate increases with redemption activity and decays over time; it discourages instantaneous large redemptions and “cools down” fees during low redemption periods.
Borrowing fee: charged once as a percentage of borrowed CNYT; specific bounds and Recovery Mode effects are algorithmically determined.

Depositor returns: Stability Pool depositors absorb liquidation debt and receive proportional ETH and JIAOZI rewards.
Front-end rewards: front ends earn algorithmically issued JIAOZI for providing SP access. The default kickback cap is 10% (per deployment parameters).
Permissionless access: any team can run a front end (as in Liquity), without permission; rewards are automatically settled—no manual distribution.

Total supply: 100,000,000 JIAOZI (hard cap).
Initial distribution (minted at deployment):
- 32% (32,000,000) to CommunityIssuance (algorithmic issuance to Stability Pool depositors and front ends).
- 1.33% (1,330,000) to LP rewards (Unipool rewards contract).
- 12% (12,000,000) to bounty/hackathon/airdrop addresses.
- 54.67% (54,670,000) to the multisig address (only transferable to registered lockup contracts; minimum lockup 1 year; not stakeable).
Value capture: stake JIAOZI to share protocol fee revenue—borrowing fees (in CNYT) and redemption fees (in ETH); no governance rights.
How to earn: Stability Pool deposits, JIAOZI staking, front-end facilitated deposits, early participation, etc.

Hard peg:
- Redeemability: 1 CNYT redeems ETH of equal par value.
- Collateralization constraint: the 110% minimum collateral ratio and liquidation mechanism provide a safety boundary.
Soft peg:
- Dynamic rates: when CNYT trades below par, redemption activity rises and minting costs increase, preventing short-term over-issuance and continued devaluation.
Oracle protection: dual oracles, state machine, time windows, deviation thresholds, price guardrails, and lastGoodPrice fallback, enhancing robustness and observability.

Governance-free: no admin keys and non-upgradable contracts; parameters are fixed at deployment or constrained algorithmically.
Front-end diversity: multiple front ends improve censorship resistance; users can freely choose their entry point.

The core contract architecture is derived from Liquity v1, which has run on mainnet for a long time and has undergone multiple audits (Trail of Bits, Coinspect).
This project only localizes the price feed; core fund flows and risk-control logic remain consistent, maintaining a small attack surface.
Risk disclosures:
- Borrowers: when the collateral ratio falls below 110%, ETH collateral may be liquidated; borrowed CNYT remains the borrower’s liability.
- Stability Pool depositors: typically gain more ETH when absorbing liquidations, but declining ETH prices while maintaining exposure can cause notional losses.
- Other risks: in extreme scenarios, hacks or unknown vulnerabilities may still occur.

Borrowing fee: charged once as a percentage of the borrowed CNYT amount, dynamically influenced by redemption activity.
Redemption fee: charged on the amount of ETH redeemed, adjusting with the base rate and redemption volume.
Fee cooling: decays over time when there are no redemptions, reducing user costs during normal periods.
Recovery Mode threshold: TCR < 150% triggers Recovery Mode, enforcing a return to higher collateralization.

Early phase: launch and optimize JIAOZI incentives for CNYT/ETH LP and the Stability Pool.
Ecosystem expansion: encourage more front ends, open community activities and bounty incentives.
RAW assets exploration: promote native on-chain applications for more real-world assets in a decentralized manner (directional description; details to be announced).

Trove: a user’s collateralized debt position.
Stability Pool: the pool that absorbs liquidation debt and distributes ETH and JIAOZI.
Redemption: the mechanism to exchange CNYT for ETH at par.
TCR: Total Collateral Ratio (system level).
lastGoodPrice: the fallback price from the price oracle.

Last updated 25 days ago