⚡Litepaper

The unstoppable bitcoin-native stablecoin $PUSD

Stablecoins are undoubtedly the single most important instrument in DeFi. They settled over $12 Tn. on-chain last year, more than 70% of DEX volumes were denominated in stables, and over 40% of TVL in DeFi are occupied by stablecoins.

And yet, while DeFi aims to build a parallel financial system; stablecoins that are a huge part of the ecosystem remain tied to traditional banking infrastructure. This is a single failure point that creates a risk of centralization, censorship, and disruption of DeFi services. Crypto immediately needs a decentralized base money asset to stay truly trust-less and scale in a sustainable manner.

Stablecoins are not only the foundation of the industry but are also arguably the only asset to have found product-market fit globally with 100M+ users and hold the greatest potential for revenue generation. We see fully-backed stablecoins as a trillion-dollar opportunity with a $100B+ addressable market that has been unlocked by the newfound growth of BitcoinFi.

To cater to the BitcoinFi market, we are building Palladium - a stablecoin protocol that is operated and scaled upon Bitcoin. With the Bitcoin market cap expected to grow from $1tn to >$2tn over the next 12 months, there is already sufficient scale for Palladium’s PUSD to grow into the billions.

Palladium is operated on Botanix - a truly decentralized Bitcoin L2 powered by Spiderchain that creates a trust-less asset bridging and secures all transactions with the finality on the Bitcoin Network. Palladium derives its robust peg-stability by over-collateralizing PUSD with BTC. Additionally, Palladium employs a governance-less mechanism that fully embraces the spirit of Bitcoin. There are no DAO or admin keys so the protocol can never be controlled or manipulated by any authority. Instead of relying on active governance or monetary interventions, the protocol maintains peg stability through economically driven user interactions and arbitrage. PUSD holders can anytime redeem their stable for $1 worth of BTC. The redemption mechanism along with algorithmically adjusted fees guarantees a minimum stablecoin value of $1.

Palladium at its core is a collateralized debt protocol. Anyone can mint PUSD using their BTC and get instant access to interest-free liquidity. Users can premissionlessly borrow up to 90% of their Bitcoin value in PUSD. The protocol implements a two-tier liquidation mechanism that allows for high capital efficiency while keeping the system stable even when the collateral ratio drops as low as 110%.