Eczodex - a stablecoin offering intrinsic capital growth

Description

Today millions of people invest in financial markets without a rational approach to their investment decisions. Irrational market behaviour triggers boom and bust cycles that can have damaging economic consequences to households and businesses. Furthermore, in the era of social media the risk of financial market gamification has increased; assets can be pumped and dumped from just a single tweet or message board posting.

Eczodex believes self-pricing financial instruments are a solution to irrational market behaviour. Our entry offering targets the cryptocurrency markets with a stablecoin statistically proven to combine intrinsic capital growth with low volatility.

A back test against our prototype pricing algorithm, spanning 20 years, revealed that over 99% of daily price swings fell within the range of 0-1% and generated an average annual yield of 6.6%.

Problem

Our project is looking to address the following problems:

  • Bipolar investment selection - Investors can choose to invest either in volatile
    coins that bear the risk of exiting at loss; or stablecoins not yielding any intrinsic interest.

  • Asset pricing driven by noise - Social media has increased the risk of financial market gamification; assets can be pumped and dumped from just a single tweet or message board posting.

  • CBDCs threaten stablecoins - Central bank plans to launch stablecoins creates an
    existential threat to fiat-pegging stablecoins.

Goals

Building on the initial success of dynamic pegged coins such as RAI and Float, Eczodex aims to further innovate in this space, providing price stability with a free floating asset.

Our prototype coin, modelled on US fundamental data, draws on the quarterly balance sheets of public listed companies to set its pricing peg. The result is a coin with 2000 price updates per year, is free floating against the dollar, and does not require a fixed peg to maintain stability. Instead, price stability is achieved simply by virtue of the weighted average book values of the companies that make up the composition, which is regularly updated to reflect the top performing 500 companies by public market cap. Our back test generated a 6.6% annual yield.

Use cases:

  • Stablecoins are well represented on the AAVE platform; therefore, Eczodex is well positioned to contribute to expanding the AAVE ecosystem.

  • It is an ideal investment asset for DeFi Insurance protocols that have to invest $500mn + in stable, risk-averse products

  • It is an attractive investment asset to onboard institutional investors

  • It provides an alternative to negative or low yielding bank accounts, encouraging further adoption of DeFi products and services.

Milestones

To date we have developed the protocol design and prototype pricing algorithm.

We have initially received very promising and positive feedback within the Cambridge University ecosystem, encouraging us to design and develop an initial prototype on Ethereum’s testnet. Now we want to take the next step and further validate our proposition within the DeFi community.

We are targeting the following milestones:

  • Develop our market making smart contract which will integrate with Uniswap v3 (2months)
  • Develop the pricing algorithm (3 months)
  • Develop the treasury management smart contract (4 months)
  • Release a fully functioning prototype to Ethereum testnet (4 months)
  • Obtain legal counsel covering all legal & regulatory aspects of the launch (4 months)
  • Community building and prototype feedback (4 - 6 months)
  • Stablecoin launch (7 months)

Team

We are a team of 3 Cambridge students:

Michael Quartey

  • Cambridge University (post-grad), UCL
  • Background in Back-office software application architecture
  • 20+ years IT experience as contractor to leading bancassurance organisations
  • Managing Director of Fast-food franchise in London

https://www.linkedin.com/in/michael-quartey-1786624/

Lukas Bruell

  • Cambridge University (post-grad), Imperial College, Warwick
  • Background in Law, Finance, Data Analytics
  • Work experience with McKinsey, Credit Suisse, Latham &Watkins
  • Founder of MergerSight - leading M&A platform

https://www.linkedin.com/in/lukasbruell/

Taran Sabharwal

  • Cambridge University (Maths & Physics undergrad)
  • President of the Cambridge Blockchain Society
  • Work experience at CMR Surgical and in E-commerce

https://www.linkedin.com/in/taranveerss/

Funding Request and Budget Breakdown

We are looking for the following:

  • A grant of $25,000 to recruit an experienced solidity developer will enable us to develop the following elements:

  • Market making smart contract

  • Pricing algorithm

  • Treasury smart contract

  • Release to testnet

  • Feedback on the concept and community development. We anticipate having a fully functioning protocol in testnet within the next few months.

Relevant Links

Thanks for this intro to your project

Could you please elaborate on your positioning within the Aave Ecosystem and how Aave could benefit from Exzodex? There are already many stablecoins out there, only the less risky ones/most proven currenlty on Aave

For Aave Grants, you also need to get in touch via the Aave Grants DAO Notion

Thanks for the response. Answers below:

Positioning within the Aave Ecosystem
Floating peg stablecoins untied to FIAT currencies are an asset class in their own right. They provide investors with another option to run a diversified portfolio and hold distinct advantages to the inevitable introduction of CBDCs. Our bet is that they represent the future direction of stablecoin innovation.

Currently floating peg stablecoins are not offered on the Aave protocol, however with recent launches in this category such as RAI and FLOAT, we believe that it’s only a matter of time
before they become a staple asset class on the biggest DeFi money market platforms.

Collaboration with Eczodex
Eczodex is at the beginning of its journey to develop a market leading floating peg stablecoin. Currently a team of 3 from Cambridge University, we have good access to talent and contact with the Centre for Alternative Finance which is progressing research into crypto and the wider DeFi space at Cambridge Judge Business School. The opportunity to work closely with who we believe our potential customers are, is the reason behind this grant application. By collaborating with us on protocol design, Aave gets to make a first hand assessment of the value proposition, the team behind it, and at the most granular level the smart contract code.

We fully understand that any protocol must be proven to work and our initial view is that it will require at least a year post launch as evidence of its credentials. Nevertheless we see early collaboration as ultimately a win-win outcome, that will grow both the Aave ecosystem and usage of Eczodex stablecoin.

We look forward to hearing from you and are willing to jump on a call at a time of your convenience.

Michael, Lukas & Taran