Real USD Backing
What backs Real USD specifically ?
Real USD is backed by four primary buckets of assets:
- 1.Tokenized, yield-producing real estate - The core of Real USD is the treasury of tokenized real estate. The rental yield from these assets supply the yield for USDR.
- 2.DAI - Some of the DAI used to mint Real USD is held as DAI in the treasury for redemptions.
- 3.Protocol-owned liquidity - 20% of the market cap of USDR is held as protocol-owned liquidity. Currently this is concentrated in the USDR-3Crv pool on Curve Any time new USDR is minted and POL is below 20% of market cap, the LP is topped up. This ensures that there’s always sufficient liquidity for swaps in and out of USDR.
- 4.Tangible’s governance token TNGBL - TNGBL is used to mint Real USD at a 1:1 value ratio and is used by the protocol to provide various incentives. Up to 10% of amount of USDR minus USDR redeemed can be minted with unlocked TNGBL.
- 5.Insurance Fund - Circa 5-10% of the market cap will be held as an insurance fund.These assets can be utilized in an emergency situation to help with peg or sold to meet redemption requirements.
The market cap of Real USD is the 1:1 relationship between the total number of USDR in circulation and the various assets at their representative percentages backing each token.
The total backing of Real USD will exceed 100% with some assets represented at a higher percentage in the total backing than they are in the market cap.
What is DAI?
DAI is another stablecoin that is primarily backed by USDC which is backed by USD held in a bank account. Essentially therefore DAI is just decentralized tokenized US dollars. A portion of the treasury is always kept in DAI to ensure there is always sufficient liquidity to meet redemption requirements.
What is TNGBL?
TNGBL is the native token of Tangible, it derives value from the fact that all Tangible marketplace fees accrue to it.
How does Tangible manage the Real USD protocol-owned liquidity?
20% of all of Real USD's market cap is held in the protocol-owned liquidity.
20% is held in a USDR-3Crv pool on Curve.
When new Real USD is minted, up to 20% of new market cap is automatically taken from the treasury and added to our protocol owned liquidity. This ensures that there’s always sufficient liquidity for swaps in and out of USDR and TNGBL.
If user liquidity is added to the pool and it exceeds the 20% required by the protocol, new funds added to the treasury will be diverted elsewhere until the 20% needs to be topped off again.
Why is Real USD liquidity on Curve?
Curve is the stablecoin nucleus of DeFi. From a product placement perspective, this feels like the best place to build exposure for USDR and the most natural location for liquidity to live moving forward.
From a native yield perspective, the USDR-3Crv pair will vastly outperform any other stable pair on Curve, leading to new adoption. The Aave 3pool is Curve’s highest yielding stable pool on Polygon, currently returning 1.4%. At launch, the USDR-3Crv pool will return ~10% APY, the highest yielding pool on Curve. We view this as a major driver to growth.
The 3pool itself brings a user experience benefit, allowing DAI, USDC and USDT holders to more easily and cheaply swap to USDR.
Lastly, with our integration into the Curve gauge, we can participate in Curve governance to drive CRV protocol emissions to our pool, staking our POL on Convex to earn max rewards and using those benefits to drive additional inventives to our pool.
How does minting against gains to treasury value make the system stronger?
Minting against gains to TNGBL allows us to shift value from a volatile digital asset into the stability of a yield-producing physical asset.
Gains to the price of TNGBL and overcollateralization from TNGBL in the Real USD treasury have the benefit of giving the system some collateralization cushion, but digital assets can fall in price just as quickly as the gain value. By shifting that value from TNGBL into real estate, we’re able to lock it into the stability of a real world asset, a property which is much less likely than TNGBL to lose significant value. If the price of TNGBL falls, those gains have already been locked into new property and the collateralization is more secure.
Further, TNGBL does not currently offer any significant yield to the system. Holding excess value in TNGBL does not make USDR more attractive to investors and new users. By realizing the gains to TNGBL and using those funds to purchase more real estate, we can turn that value into incremental yield for USDR, which has a lasting, permanent benefit.
Minting gains in real estate into new properties serves a similar function. In this case, we’re not as worried about the volatility in the price of real estate as we are with TNGBL, however we do want to use gains to boost yield whenever we responsibly can.
If we have a property that’s gone up in value, we can realize that increase in price and use those funds to purchase more properties. By using overcollateralization to add new properties to the backing we’re able to use that value to boost the yield.
At times, some of the Real USD minted against gains will be used to incentivize yield by swapping it for DAI and adding that money to the incentive vault.