Explainer; ib Stablecoin Tokens

TL;DR

Short post to explain for new / existing users the purpose & use case for ib stablecoin tokens. Includes;

  • Why users hold ib stablecoin tokens
  • How ib stablecoin tokens are issued
  • How ib stablecoin tokens hold their value
  • Reserve Ratios as a safety mechanism
  • How vested KP3R token holders earn fees from ib stable token demand
  • Explaining the link between Fixed Forex & Iron Bank Assets
  • How users can earn yield on ib stable tokens
  • Directions on raising additional questions or queries

Any member of the team or community is free to suggest additions, corrections or updates.


Why users hold ib stable tokens?

The appeal is as follows;

  • To hold assets that are not exposed to the same variability in value as other (volatile) assets, for example wBTC, ETH etc.
  • To gain exposure to stable assets that aren’t based on a peg with USD (for example to invest in on-chain opportunities without having to have expose to USD currency fluctuations vs users fiat currency)
  • To seek yield opportunities that may exceed those available to users through fiat

How ib token are issued to users?

How do ib token maintain their value?

  • Iron Bank is responsible for the oracles used
  • Fiat oracles are used (see here) rather than the on-chain value of the ib stable token
  • This means that;
    • As far as Iron Bank is concerned each ib token is worth the same as it’s fiat equivalent, for example 1 x ibEUR will always be worth 1 x EURO valuation for Iron Bank
    • Each ib token lent out is backed by collateral that is worth more in $ terms than the ib token - if the collateral is variable & loses value then the borrow risks liquidation of their collateral

This means, that even if curve pools are offering slippage on ib tokens, borrowers can take advantage of cheap prices to acquire ib tokens & because Iron Bank always values ib token at fiat price, can take advantage of the arb opportunity. Therefore rates offered on curve, inclusive of any slippage, will not impact the peg of ib tokens.

Safety mechanism; the reserve ratios

Additionally, it’s worth noting that Iron Bank builds up a reserve of funds for all assets borrowed, funded by the borrowing fee based on;

How to vested KP3R token holders earn fees from ib stable token demand

Vested KP3R token holders earn a fees from ib stable tokens from two sources;

  1. Fixed Forex Minting Fees
  2. Fixed Forex Reserve Fees

Simply put, this means the higher the demand for ib stable tokens then the greater the amount of fees generated will be. Andre previously explained further details on how these fees are generated in the support thread

Explaining the link between Fixed Forex & Iron Bank assets

Further details of how Fixed Forex & Iron Bank assets are linked can be found in the Fixed Forex docs

How users can earn yield on ib stable tokens

Users who borrow ib stable tokens can earn further yield by depositing ib stable tokens into LPs or LP wrappers that are making use of the liquidity to offer additional users swaps between assets. Currently these are available for;

  • Curve;
    • where users will earn fees from swaps + additional CRV rewards
  • Convex;
    • which accepts deposits of curve LPs & provides additional CVX rewards whilst charging a fee
  • Yearn;
    • which accepts curve LPs & auto-compounds based on the strategies deployed into the yearn vault

Note;

  • Curve pools can also receive additional boosts from other additional rewards such as rKP3R rewards that are provided to some ib stable token pools.
  • Assets that ib stable tokens are paired with in liquidity pools may also offer additional rewards.

The Keep3r treasury holds a vlCVX position that it utilizes to vote for curve gauges - this boosts the amount of CRV rewards that will be available per pool. Users should be aware that CRV rewards will naturally scale downwards as more TVL enters pools in a linear fashion.


Directions for raising additional questions or queries on ib stable tokens

Please use the comments section below to add any questions or queries regarding ib stable tokens, their mechanisms and how to access them.

2 Likes

There is no people that want to buy the ib-assets at their real price, this will get worse when the rewards for the pools goes down in the future.
It’s impossible to exit the ib-tokens because there is no liquidity and the people that have originally minted them have gone away from defi and does not want to earn the arbitrage-fees from closing their loans.

I am stuck with ib-tokens and will never be able to get them out for their real value :sob::sob::sob: