Argo Stablecoin

How would USDO work?

As a decentralized stablecoin on the Aptos Mainnet, USDO will be created by users (or borrowers). As with all borrowing on the ARCO Protocol, a user must supply collateral (at a specific collateral ratio) to be able to mint USDO. Correspondingly, when a user repays a borrow position (or is liquidated), the ARCO protocol burns that user’s USDO. All the interest payments accrued by minters of USDO would be directly transferred to the ARCO treasury; rather than the standard reserve factor collected when users borrow other assets.

USDO uses the concept of Facilitators like AAVE. A facilitator (e.g., a protocol, an entity, etc.) has the ability to trustlessly generate (and burn) USDO tokens. If this proposal is approved, then any facilitator would have to be approved by ARCO Governance. Various facilitators will be able to apply different strategies to their generation of USDO.

USDO Interest rates

Borrow interest rates for USDO will be determined by the ARCO DAO, with a stable rate that may be adapted depending on market conditions. This design retains the ARCO Protocol’s borrow interest rate model flexibility, and it will be possible in the future to implement any interest rate strategy the ARCO community sees fit.

USDO Discount Model

Given the nature of the asset, this integration allows for innovative features that provide greater utility for governance and community participants. The initial implementation of USDO includes a Discount Strategy mechanism. The initial discount strategy allows for Safety Module participants to access a discount on the USDO borrow rate. In the first implementation, the strategy will set a certain amount of USDO at discount per $USDO supplied, and a discount on the interest rates that can vary from 0% (no discount) to 100% (full discount). These parameters are controlled by ARCO governance.