# BitStable Technical Docs The BitStable Protocol is the platform through which anyone, anywhere can generate the DAII stablecoin against bitcoin ecosystem collateral assets. Learn how it works. BitStable is a pioneering decentralized asset protocol on the Bitcoin blockchain, offering a unique framework for the creation, trade, and management of synthetic assets. It enhances asset liquidity on the Bitcoin chain through a dual-token system and a cross-chain compatible structure. This documentation provides an in-depth overview of the BitStable protocol, its components, and functionalities. ## **DAII**: * **Stable and Secure**: DAII is a stablecoin that derives its value and stability from the robustness of Bitcoin ecosystem assets: BRC20, RSK and the lightning network. * **Purpose**: Serves as a medium of stability in the volatile cryptocurrency market, making it a reliable asset for trade and investment. * **Cross-Chain Utility**: With its cross-chain capabilities, DAII not only benefits Bitcoin users but also brings the Ethereum community into the fold, fostering a more interconnected and fluid blockchain ecosystem. ## **BSSB**: * **Governance and Involvement**: As the governance token of BitStable, BSSB empowers its holders with decision-making authority, ensuring that the protocol evolves in a direction shaped by its community. * **Empowerment and Earnings**: Holding BSSB is not just about governance; it's also about being a part of BitStable’s growth, sharing in its successes through dividends and other financial incentives. # BitStable Protocol 101 Getting Started with BitStable
# DAII Module The **DAII** module in the BitStable protocol is a cornerstone feature designed for the generation and management of the **DAII** stablecoin on the Bitcoin blockchain. Given Bitcoin’s limitations in smart contract functionalities, the **DAII** module focuses on a streamlined minting and burning process using the **ORDI** asset in its initial phase. ## **Generation of DAII using BRC20 $ORDI** **Minting DAII**: Users can mint **DAII** by collateralizing the BRC20 $**ORDI** token. This process involves locking ORDI in BitStable Protocol on the Bitcoin blockchain. The collaterization ratio for ordi is set at 500%. **Bitcoin's Limitations**: Due to Bitcoin's inherent limitations (only supporting basic mint and burn functionalities), the **DAII** module is tailored to operate within these constraints, focusing on a robust and secure minting process. ## Generation of DAII using BTC Users can mint DAII by collateralizing spot bitcoin. Generating DAII, a stablecoin in the bitcoin ecosystem, using Bitcoin (BTC) involves a process of collateralization where BTC is used as a security for minting DAII. This mechanism is pivotal in integrating the traditional cryptocurrency market, specifically Bitcoin, into the burgeoning DeFi space. ## Generation of DAII using BTCB DAII, a stablecoin within the BitStable ecosystem, can be generated using BTCB as collateral. This process involves leveraging BTCB, a token on the BNB Chain (BSC) pegged to Bitcoin, to create a stable digital currency pegged to the US Dollar, DAII (BEP20). DAII built on BNB chain can be bridged to BTC network for the BSSB Farm. BTCB (Bitcoin BEP20) is a token on the Binance Chain and BNB Chain (BSC) that is pegged 1:1 to Bitcoin (BTC). It was introduced by Binance to enable Bitcoin holders to participate in the decentralized finance (DeFi) ecosystem on BNB. The main advantage of BTCB is that it allows users to hold BTC while engaging in the DeFi space using BNB, without having to sell their BTC and potentially miss out on its price gains. The BTCB is backed by an equivalent amount of BTC locked in a public address, which can be audited through the Proof of Assets webpage provided by Binance​. **Liquidation Process** If the collateralization ratio falls below the minimum requirement, the BitStable protocol may initiate a liquidation process. This involves auctioning the BTCB collateral to cover the outstanding DAII debt. More will be announced regarding the BTCB liquidation ratio. ## **Cross-Chain Functionality** **DAII on Ethereum**: **DAII** minted on the Bitcoin blockchain can be bridged to Ethereum as an ERC20 token. This cross-chain functionality enhances the liquidity and usability of DAII in the broader crypto ecosystem. **Swapping for Stablecoins**: Once on the Ethereum blockchain, **DAII** can be swapped 1:1 with stablecoins like USDC or USDT, providing users with flexibility and access to smart contract blockchains' vast DeFi ecosystem. BitStable is partnered with MultiBit Bridge for cross chain transfers between Bitcoin, EVM and other L1s. **Redeem:** When users need to get back collateral or USDT on the Ethereum chain, they need to Redeem DAII on the BitStable platform to bring DAII back to balance.

Redeeming DAII

## **Mining and Rewards** **Bridging for Mining**: To participate in mining and earn rewards, users need to bridge their DAII back to the Bitcoin blockchain using the MultiBit bridge. This process ensures that the mining activities are securely anchored to the Bitcoin network. **Mining Rewards**: Rewards from mining activities are distributed in BSSB, aligning incentives with the governance and stability of the BitStable ecosystem. ## **Reversion Process** **Bridging Back to ERC20**: Users can bridge their **DAII** back to Ethereum as an ERC20 token. This reversion process is crucial for users who wish to swap their **DAII** for USDT or participate in Ethereum’s DeFi protocols. **Swapping DAII for Stablecoins**: On Ethereum, users can swap their **DAII** for USDT, completing the cycle of cross-chain interaction and offering a seamless user experience. # DAII Chronogram ## **Phase II: RSK Integration for Enhanced Smart Contract Functionality** **Integration with Rootstock (RSK)** Introduce advanced smart contract functionalities into the BitStable protocol. The integration with RSK is pivotal as it brings Ethereum-like smart contract capabilities to the Bitcoin-based DAII. This allows for the development of complex, decentralized financial instruments and automated governance processes, enhancing the protocol’s functionality while maintaining the inherent security of the Bitcoin blockchain. * Similar to how MakerDAO utilizes a series of smart contracts for automation and security, BitStable plans to leverage RSK’s Ethereum-compatible smart contract platform. This integration will enable the creation of sophisticated, automated financial contracts and protocols within the BitStable ecosystem. * The deployment on RSK will involve establishing a series of interconnected smart contracts. These contracts will manage various aspects of the DAII stablecoin, such as collateralization, issuance, redemption, and governance. By adopting a structure akin to MakerDAO's, BitStable ensures a high degree of automation, security, and transparency in its operations. ## Phase III: Taproot Integration for Enhanced Functionality and Privacy **Integration with Taproot** Taproot consolidates multiple digital signatures, which enhances network efficiency and transaction privacy. This integration will make DAII transactions more efficient and less distinguishable, aligning with Bitcoin's core principles of self-sovereignty and security​​.The introduction of Taproot signifies a major development for executing smart contracts on Bitcoin’s blockchain. This advancement addresses previous scalability challenges and opens up opportunities for more complex and scalable financial applications within the BitStable ecosystem​​. Leverage the Taproot upgrade to enhance the efficiency, privacy, and smart contract capabilities of the DAII transactions on the Bitcoin network. * BitStable plans to integrate the advancements brought by the Taproot upgrade, specifically focusing on the improved efficiency and privacy features, as well as the enhanced smart contract capabilities that Taproot introduces to the Bitcoin blockchain. * BitStable will incorporate Taproot’s Schnorr signatures to enhance the DAII transaction structure, making it more space-efficient and cost-effective. * The protocol will utilize Taproot's Merkelized Alternative Script Trees (MAST) and Pay-to-Taproot (P2TR) capabilities to allow for more versatile and private transaction options for DAII​​​​. * The integration will also explore the potential of Taproot in facilitating complex smart contract operations, leveraging its enhanced scripting capabilities (Tapscript) for more advanced financial instruments on the Bitcoin blockchain # Core Module **DAII Minting and Burning Mechanism**: Implement a system to mint DAII on the Bitcoin blockchain and burn it for the redemption of ETH DAII via the multibit.exchange bridge. **Collateral Management**: Include a mechanism to manage and track collateral assets used for minting DAII, ensuring over-collateralization to maintain stability. **Staking Rewards Distribution**: Develop a process to distribute BSSB staking rewards to DAII stakers, possibly through periodic calculations and manual or semi-automated distribution, since smart contracts are not an option. **Cross-Chain Bridge Monitoring**: Establish a monitoring system to oversee the cross-chain bridge operations, ensuring the 1:1 redemption process functions smoothly and securely. **Governance Integration**: Enable governance decisions to influence core module operations, such as adjusting parameters for minting, burning, and staking, through a manual or semi-automated system, given the lack of smart contract functionality. # Collateral Module The DAII Collateral Module in the BitStable protocol is a foundational component designed for the creation of DAII stablecoin through a process of over-collateralization. This module ensures the stability and balance of DAII by utilizing other assets as collateral, primarily focusing on the ORDI asset in its first phase. The DAII Collateral Module in the BitStable protocol is a foundational component designed for the creation of DAII stablecoin through a process of over-collateralization. This module ensures the stability and balance of DAII by utilizing other assets as collateral, primarily focusing on the ORDI asset in its first phase. ## **Over-**Collateralization **and Liquidation** ### Stake and liquidation formula: `Initial`` ``Collateralization Ratio =value of collateral / DAII debt.` ### Minimum Collateralization Ratio : Also known as **Liquidation Ratio. The Liquidation Ratio** is a critical parameter in vault management for digital assets. When a vault's collateral level falls below this predefined threshold, it becomes susceptible to liquidation. This means that if the collateralization drops under the minimum required level, the assets within the vault are auctioned to repay the outstanding debt and cover any associated liquidation expenses. For instance, let's consider a scenario where the collateralization ratio is set at 500% for staking Ordi tokens. Assuming the value of 1 Ordi is equivalent to 100 USDT, staking 1 Ordi would yield 20 DAII. This ratio is calculated as follows: 100 USDT / 20 DAII equals 5, which, when expressed as a percentage, is 500%. This high collateralization ratio is a risk mitigation measure, ensuring substantial coverage for the borrowed amount in volatile market conditions. When the market price of ORDI is at 50 USDT, the Collateralization Ratio is: 50/20=2.5 (250%) However, if the ORDI price declines to 20 USDT, the Collateralization Ratio adjusts accordingly. In this scenario, the ratio is computed as 20 USDT (value of 1 ORDI) divided by 20 DAII, yielding a ratio of 1 or 100%. (This is a critical threshold as it approaches the liquidation level). Under BSSB's Collateralization module for ordi, the initial Minimum Collateralization Ratio is set at 125%, indicating the lowest permissible liquidation ratio before a vault is at risk of liquidation. For comparison, MUBI’s Minimum Collateralization Ratio (Liquidation Ratio) is established at 200%, reflecting a more conservative approach towards risk management in collateralized debt positions." ## **Benefits of Over-Collateralization** * Over-collateralization contributes to the stability of the DAII stablecoin, enhancing trust among users in the token’s value. * It mitigates the risk of under-collateralization, particularly important in the volatile cryptocurrency market. * The mechanism ensures that DAII can withstand market fluctuations, maintaining its peg and value integrity even during market downturns. ## **Implementation in BitStable** * Initially, BitStable’s Collateral Module will accept only ORDI as collateral. This decision aligns with the protocol’s strategy to introduce a stable and trusted asset as the primary collateral in the early stages. * The protocol plans to expand its collateral base in subsequent phases, incorporating other assets to diversify risk and enhance the platform's resilience. ## **Impact of Collateral Module** * The Collateral Module is the cornerstone of DAII’s stability. By ensuring that DAII is always over-collateralized, BitStable maintains the token’s stability and reliability. * The transparent and rigorous approach to collateralization instills confidence in users, fostering trust in the BitStable ecosystem.
# DAII Farming BSSB is the platform’s governance token, which is used by stakeholders to maintain the system and manage DAII. Holding BSSB can obtain platform income dividends and voting rights, and you can also have some acceleration rights in the early stage. **How to get BSSB?** BSSB is the platform’s governance token, which is used by stakeholders to maintain the system and manage DAII. Holding BSSB can obtain platform income dividends and voting rights, and you can also have some acceleration rights in the early stage. You can stake DAII in “Farm” to obtain BSSB. It should be noted that Farm only runs on the Bitcoin chain, so when your DAII is replaced by USDT on the EVM chain, you also need to use MultiBit to stake DAII (ERC20) across the chain. If you want to obtain higher mining income, you can also stake BSSB to obtain boost equity and increase the stake weight of DAII. # BSSB Module ### **Governance Component** **BSSB Token Voting**: BSSB token holders are empowered to participate in decision-making processes, with each token representing a vote. **Proposal Mechanism**: Stakeholders can submit proposals for changes or enhancements to the BitStable protocol. **Execution of Decisions**: Implement a secure, transparent system for voting and executing governance decisions. **Governance Security Features**: Include mechanisms to enhance security, such as delay periods before implementing major decisions. 1. **Community Engagement**: Foster active community involvement in governance. 2. **Governance Interface**: Develop a user-friendly platform for stakeholders to engage with governance activities. 3. **Transparency and Reporting**: Ensure regular updates and reports on governance activities for accountability. 4. **Incentives for Participation**: Introduce rewards for active governance participants. 5. **Adaptive Governance Framework**: Allow for the evolution of the governance model based on community feedback and ecosystem needs. ### **Stabilizer Component** **Dual-Token System**: Utilize a two-token system comprising DAII, a stablecoin pegged to the US dollar, and BSSB, a governance token. **DAII Generation**: Enable DAII creation by collateralizing approved assets, starting with 'ordi'. **Cross-Chain Functionality**: Bridge a portion of DAII to Ethereum for enhanced economic activities. **Over-Collateralization Requirement**: Ensure the value of collateral exceeds the DAII minted to mitigate volatility risks. **DAII Burning Mechanism**: Allow users to retrieve collateral by burning equivalent DAII, maintaining DAII's stability and balance. **Staking and Incentives**: Introduce mechanisms for staking DAII and BSSB, with incentives and mining boosts, subject to a lock-in period.