# Stablecoins and the On-chain Ecosystem #### 1. What is a Stablecoin? A stablecoin is a digital cryptocurrency designed to maintain a 1:1 value peg with a fiat currency like the US Dollar or a specific asset, using algorithms and reserves. It minimizes the high price volatility typical of the cryptocurrency market and serves as a standard of value in the on-chain ecosystem. #### 2. The 3 Core Stablecoins Supported by the Aqua Ecosystem For user convenience and liquidity efficiency, the Aqua ecosystem supports three of the most globally trusted major stablecoins: * USDt: The #1 stablecoin boasting the highest trading volume and liquidity in the global crypto market. It acts as the reserve currency of the on-chain ecosystem. * USDC: A stablecoin issued in compliance with strict US financial regulations, highly recognized for its reliability and stability through transparent reserve audit reports. * AUSD: An on-chain native stablecoin optimized for decentralized networks, specialized in maximizing capital efficiency and connecting liquidity within the DeFi ecosystem. #### 3. Why Use Stablecoins? * Value Standard with Minimized Volatility: Assets like Bitcoin and Ethereum experience significant price volatility depending on market conditions. Conversely, stablecoins are designed to track the value of 1 dollar, allowing users to reduce exposure to market volatility when providing assets to smart contracts or interacting with them. Recently, major global countries have been recognizing their utility by establishing regulatory frameworks to integrate stablecoins as institutional payment methods. * Routing Standard for the On-chain Ecosystem: In a DeFi environment, a standard asset is required when swapping liquidity or calculating protocol rewards. The Aqua ecosystem also sets stablecoins as the baseline for all on-chain interactions, including reward calculation and liquidity pool connections, providing a transparent and intuitive environment. * Efficiency in Global Transfers: Transmitted through blockchain networks, they have no border restrictions and can be transferred at very high speeds with low network fees compared to traditional financial systems. #### 4. How do Stablecoins Interact within the Aqua Ecosystem? * Swap and Liquidity Routing Standard: Through the PumpSpace Decentralized Exchange (DEX) within the Aqua ecosystem, users can swap various crypto assets (e.g., AVAX, BTC.b, WETH.e, SHELL) into stablecoin-based V2/V3 pair pools, single pools, and NFT pools to participate in providing liquidity. Because the standard asset is a stablecoin, users can intuitively understand the scale of their provided liquidity and the generated protocol rewards based on their dollar value. * Standard for Liquidity Provision and Reward Calculation: Major liquidity pools integrated with the Aqua ecosystem calculate protocol incentives in stablecoin units. Since rewards for contributions are also calculated based on stablecoins, users can check the value of their earned rewards intuitively with relatively no volatility. * Conversion to Liquidity Proof Tokens (b-Tokens): To provide liquidity to the Aqua ecosystem's single-asset model, USDt, USDC, and AUSD must be converted into their respective smart contract proof tokens: bUSDT, bUSDC, and bAUSD. * Upon Provision (Minting): Conversion from base asset to b-Token (0% protocol fee, excluding network gas fees). * Upon Withdrawal: Can be withdrawn from b-Token back to the base asset at any time (A 0.2% protocol fee applies upon withdrawal). #### 5. What are b-Tokens (bUSDT, bUSDC, bAUSD)? b-Tokens are liquidity provision proof tokens minted at a 1:1 ratio to prove that a user has supplied stablecoin liquidity to a smart contract. The actual interaction of assets occurs through smart contract code, and the b-Token itself does not guarantee a fixed dollar value or act as an investment contract yielding profits. If you stop providing liquidity and withdraw your base assets, the corresponding b-Tokens are burned, and your assets are returned along with the contribution rewards accumulated in the smart contract. > 🚨 Important Notice: Check Supported Network The Aqua ecosystem only supports assets based on the Avalanche network. Specifically, to fundamentally block bridge hacking risks, we only use native stablecoin assets issued directly on the Avalanche chain. When connecting your personal wallet and transferring assets, please ensure the network is set to 'Avalanche C-Chain'. Transferring through a different network may result in permanent loss of assets. #### 6. Summary of Core Roles for Stablecoins in the Aqua Ecosystem | **Role** | **Description** | | --------------------------- | ------------------------------------------------------------------------------------------- | | Value Standard | Tracks 1 dollar value to minimize on-chain volatility | | Routing Standard | Acts as a hub for efficiently swapping various crypto assets | | Provision & Reward Standard | An intuitive indicator for the scale of liquidity provision and protocol reward calculation | | Ecosystem Integration | The base asset for b-Token conversion to participate in the on-chain ecosystem | > ℹ️ Conclusion By adopting globally standard stablecoins (USDt, USDC, AUSD) as its core assets, the Aqua ecosystem provides an intuitive and transparent interface that even on-chain beginners can easily understand. 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