Recently, the investment research team has been digging into innovative projects on the #SOL chain, abandoning outdated concepts, and focusing on recent hot topics like #Payfi, #RWA, stablecoins, etc. We actually found a rather interesting project, an algorithmic stablecoin project that is quite intriguing. The project currently doesn't have a coin yet, and the rumored contract address hasn't been officially confirmed, so please be mindful of risks and security, and this is only for research observation.
Convergent Protocol (@convergent_so) aims to create a truly decentralized algorithmic stablecoin called USV on Solana. We all know that the stablecoin market is dominated by centralized players like USDC and USDT, which, while convenient, always gives a feeling of 'having your lifeline in someone else's hands.' #Convergent wants to change this situation, allowing the Solana ecosystem to have a more independent, censorship-resistant, and community-driven stablecoin. At the same time, it also wants to make your SOL work more efficiently to 'generate money.'
Let’s break it down and explain it simply, as algorithmic stablecoins can be quite complex:
First, what is the stablecoin called #USV?
The target price is 1 US dollar: USV is pegged to the US dollar at a 1:1 ratio.
How to maintain the 1 US dollar price? It relies on an algorithmic mechanism rather than a centralized authority: If USV falls below 1 US dollar (for example, to 0.9 US dollars): The system will encourage people to buy the cheaper USV on the market and then destroy it. By destroying USV, you can redeem your previously collateralized assets at a discounted price. As a result, the supply of USV decreases, and the price rises back towards 1 US dollar.
If USV rises above 1 US dollar (for example, to 1.1 US dollars): The system will increase the cost of minting new USV (for example, requiring more collateral), which will discourage people from minting new USV, reducing demand and gradually bringing the price back to 1 US dollar.
The core concept is that it does not rely on USDC, which is quite interesting! This project emphasizes that it does not need centralized assets like #FRAX or #DAI (which initially relied on USDC) to maintain stability. Instead, it uses a set of incentive and penalty mechanisms for dynamic regulation, making it more pure.
Benefits of USV: 0% interest loans, over-collateralization, your liquidity staking rewards (LSD yield) are not taken as a fee, fully decentralized, censorship-resistant, and it can be combined with other DeFi Lego blocks at will.
How do users play? How do they make money?
Deposit SOL, borrow USV (0% interest): By partnering with #Jito, you can collateralize your SOL (mainly JitoSOL, a yield-bearing SOL) in the Convergent Protocol, and then borrow the stablecoin USV at 0% interest (not sure how this is achieved, whether through early subsidies or something else)!
Anyway, this is quite appealing. Your SOL is still working for you: The SOL you collateralized (JitoSOL) will automatically earn you Solana staking rewards and MEV profits. This means your principal is still at work.
Uses of #USV: The borrowed USV can be used in other DeFi projects within the Solana ecosystem for activities like leverage trading, providing liquidity (LP), lending, etc.
Nexus system: You can deposit USV in a place called Nexus, where you can earn liquidation profits and even mine their future governance token $CVGT. The future V2 version is more powerful: Looking at the V2 diagram, the interactions between users, SOL, and USV have increased. It also introduces something called AMO (Algorithmic Market Operations Controller), which automatically balances the price when USV exceeds 1 US dollar. Users can also stake CVGT tokens to earn protocol fees.
What are AGENTS NFT and FRAGMENTS?
AGENTS J (NFT): This is their genesis NFT series. In simple terms, it is a way for the project team to attract early core users, build a community, and connect with valuable investors/DAO organizations before the project officially launches. Holders of this NFT may receive airdrops, whitelist opportunities, or other benefits in the future. They have also listed many collaborating NFT project teams.
FRAGMENTS (points system): Before their token $CVGT is officially issued (TGE), they set up a points system.
How can you earn points? For example, by staking your AGENTS NFT, using their dApp (application), or meeting some (not fully disclosed yet) conditions for retroactive airdrops. These points will be exchanged for their $CVGT token at a certain ratio in the future. This is a common early user incentive and community guidance method, allowing everyone to participate and contribute at the initial stage of the project.
Overall, it’s quite an interesting project. A decentralized algorithmic stablecoin is one of the holy grails of #DeFi, especially in a public chain ecosystem, where having a native, powerful decentralized stablecoin is very important. The #Solana ecosystem indeed needs such a role; let’s see if it can emerge. It is said to be a direct pump and fair launch, and currently, there is no official contract address, so please be cautious and wait for official updates. Any new project carries uncertainties, and the team's execution ability, technical realization, and market acceptance need time to verify. All bosses should DYOR and not rush blindly. You can keep an eye on it and observe the project's subsequent developments, especially the progress of the NFT and points systems, as well as the actual performance after the final product launch. 🧐 Purely for research, not advertising.
