Proposal: Funding for Altered Protocol

  • Project Name: Altered
  • Team Name: LoTerra
  • Payment Address: terra1th7wznjznnyck42v3eyma6cukqvrttsq75cu5a

Project Overview

Altered is an oracle acting as a tracker, prices are driven by the market but synthetics are elastic tokens and always go in the right direction after a rebase, price of synthetic can be queried by third parties contracts comparing Dex trading price and rebase sponsor price.

The damping factor is used to avoid sharp supply changes. The protocol spreads the supply change over a period of 10 rebases.

Overview

Create Synthetic Tokens using Altered Protocol.

Altered is designed to mix the elastic supply (Example: Ampleforth) with the creation of Synthetics Tokens and Derivatives (Example: UMA), all this managed by a DAO.

This project contributes to the evolution we planned for LoTerra, by offering a space dedicated to games on Terra but also for the benefit of all projects.

Project Details

Synthetic tokens are guaranteed tokens [CW-20] whose value fluctuates according to the token’s benchmark.

These tokens have 3 characteristics:

  • Price identifier
  • Rebase time
  • Expiration date (at which the contract is settled) (optional, not available at launch)
  • Collateral requirement (must be at least 600% of the value of the tokens issued nut can be changed by DAO vote, for example, to issue $ 100 USD of synthetic gold tokens would require $ 600 USD of locked cryptocurrency as collateral UST or ALTE)

:one: Creation

The sponsor can create a synthetic token for the asset when sufficient collateral is deposited and creation fees are paid, the terms of the contract are created for the issued token and enforce them using financial incentives. Once the synthetic token is created it can be traded after DAO approval to limit spam and scam.

:two: Rebase

Every x rebase time the Sponsor must enter the price of the token for the rebase to be carried out.

  • Price entered must be collateralized by the Sponsor in case of dispute
  • If the price entered is higher than the old price, Sponsor has to reinforce his collateral if not the contract will not accept the rebase price.
  • Synthetic price update is open before the rebase happens, during this timeframe all sponsors can update multiple time the price according to the off-chain source price of the asset being synthesized.

:three: Dispute

If someone disagrees with the Sponsor’s price, he can open a dispute by depositing collateral in UST or ALTE.

  • DAO receive the dispute and vote with the correct price if there is 5% price variation the sponsor

Is liquidated. If provided price by the sponsor is in the range disputer is liquidated

:four: Liquidation

Instant liquidation:

  • Disputer can liquidate immediately a sponsor who reach the limit of 300% collateral

DAO liquidation:

  • Disputer open a dispute and DAO vote and liquidate the party providing the wrong information

When liquidation happens the cw20 burn message is called with the previously minted amount of the synthetic asset being collateralized.

Liquidation fees:

  • DAO get fees for voting
  • Disputer get fees for winning the dispute
  • Sponsors gets fees for winning the dispute

Sponsor liquidation case:

  • When a sponsor is liquidated all his created synthetics are burned decreasing the total supply

E.g:

1 - Charlie mint 5000 synthetic Gold tokens and Alice mint 1000 at a price of 1$ with collateral of 600% (6000 UST or ALTE) total supply is 6000 synthetic Gold tokens.

Since Charlie is the genesis account creator of the sponsor contract he owns 100% of 100% of the supply Alice owns 20% of 120%.

2 - Alice sells 500 tokens to Bob. Bob as Alice now own 10% of 120%.

3 - On the next rebase Gold tokens price is 2$ Alice collateral falls to 300% and reaches the liquidation limit.

4 - Disputer calls liquidation.

5 - Alice’s total minted tokens are burned creating a Wrapped Remaining Token (WRT). Index total supply fall from 120% to 100%. Total burned supply is now 1000 WRT index is 20%.

6 - Bob previous index was 10% of 120% but since the total supply falls from 120 to 100% Bob own now 0% of 100% all his balance was burned instantly but he won a new token called WRT and now own 10% of 20% this means he owns 50% of the collateral of Alice and can withdraw at any time his UST or ALTE from the Vault.

Disputer liquidation case:

  • When the disputer is liquidated his collateral is shared against DAO and Sponsor

:five: DAO

Not decided yet but probably a token will be released for governance allowing:

  • Disputes
  • Project features & evolution
  • Set fees (contract creation fees, dispute fees)

DAO receive rewards for voting (Non-voters or wrong voters do not receive rewards.

:six: Fees

Fees are collected in ALTE and serve to maintain a high DAO token price in order to prevent DAO corruption.

Ecosystem Fit

Altered fits well within the ecosystem because it fills a need that is still existing and that must be fixed.

This project targets all Terra protocols, but also independents who need to bring off-chain values to the chain.

Team

Team members

  • Leaders: 0xantz & YundoRocket
  • Member: Tim & Dan

Contact

Team’s experience

LoTerra team started building Terrand: an oracle smart contract on Terra to get distributed randomness beacon. Verifiable, unpredictable, and unbiased random numbers as a service.

Thanks to Terrand we were able to build the first lottery on Terra. To complete and for this lottery to be self-managed, we have added a staking contract to build a DAO around this lottery.

Team Code Repos

GitHub accounts of all team members:

Development Status

We have already built the first part of the project, the first synthetic which mimics the value of UST.

The contract is currently in Mainnet and you can inquire about the documentation here https://docs.alteredprotocol.com/introduction/what-is-altered-protocol

Development Roadmap

Overview

  • Total Estimated Duration: month
  • Full-Time Equivalent (FTE): 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0
  • Total Costs: 100,000 UST

Milestone 1 — Additional features

  • Estimated duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,660 UST

Milestone 2 — Additional features

  • Estimated Duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,660 UST

Milestone 3 — Additional features

  • Estimated Duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,670 UST

Milestone 4 — Additional features

  • Estimated Duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,670 UST

Milestone 5 — Additional features

  • Estimated Duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,670 UST

Milestone 6 — Additional features

  • Estimated Duration: 1 month
  • FTE: 0xantz - 1.0 / YundoRocket - 1.0 / Tim - 1.0 / Dan - 1.0
  • Costs: 16,670 UST

So the sponsor basically needs to match price increases of the synthetic asset with 600% collateral? What happens when the sponsor is liquidated? Is the synth dissolved? Who becomes the new sponsor? Are there more than one sponsor?

How often is it expected that oracles are updated? Why would a sponsor want to run an oracle where they take on liquidation risk and have to pay oracle tx fees?

Given the price action seen with AMPL dont you see huge risks with ALTE being used as collateral? How do you plan to mitigate these risks?

How does this project plan to compete against Mirror? Mirror is much more capital efficient and presents less risk to minters and holders and minting with aUST is very attractive.

And lastly Altered has not been made open source i think most agree this would be a requirement of a community funded project.

2 Likes

In addition, the proposal describing the specific costs/operations are very vague and seem to be copied from exactly the last two proposals the team has submitted to the Ecosystem Grants committee. Funding should not be requested every time you decide to roll out a new update.

To my knowledge, the team is well funded, so why don’t you build the product first and then do a raise if necessary?

6 Likes

Concur with Stanford’s sentiment - not certain what the community is buying with this grant.

2 Likes

I’ve been excited for this added functionality for quite a while, as I didn’t think the Ampleforth-style supply mechanics alone were enough to give ALTE any utility or value prop. That being said, I was significantly underwhelmed by the launch (with an atrocious front-end and lazy documentation) that I don’t have much faith in this project. Was the initial launch really that bad of a failure that it couldn’t fund its own development? I’m sorry but I don’t see why this is worthy of Terra’s Community Pool funds.

Hard NO from me for any funding, but I may be interested to check it out once it’s been developed and properly polished.