Bitcoin-Driven Innovative Stablecoin: Aegis's YUSD Design and Operation Mechanism

In the stablecoin space, we have seen solutions supported by fiat currency and collateralized by cryptocurrencies. Aegis has proposed a completely new approach: a Bitcoin-based stablecoin. This bold design is expected to succeed for the following reasons.

Currently, most stablecoins rely on centralized systems, such as fiat custody, bank settlement, and regulatory constraints. These are exactly what Bitcoin aimed to avoid from the very beginning. Aegis takes a different approach, building a system around Bitcoin rather than banks.

The stablecoin YUSD launched by Aegis has the following features:

• pegged to 1 USD
• Bitcoin as collateral
• Maintain stability by shorting perpetual contracts
• No need for oracle, fiat reserve, or third-party intermediary

The minting of YUSD requires depositing stablecoins such as USDT, USDC, or DAI into a smart contract. Once verified, YUSD can be generated, and the collateral is transferred to a custodian vault. The entire process is controlled by a smart contract without human intervention.

The operation process of Aegis is as follows:

1. Users obtain YUSD through minting or trading.
2. Aegis uses these funds to purchase Bitcoin.
3. Open a short perpetual contract to hedge risks
4. Earn funding fees from short positions
5. The profit portion is injected into the insurance pool, and part is distributed to YUSD holders.

Aegis profits by shorting Bitcoin perpetual contracts, collecting funding fees from the long positions. As long as there is demand for long positions, fees can be collected three times a day. This is not staking or inflation, but rather converting counterparty pressure into profit.

YUSD holders can earn rewards without any additional actions. After Aegis earns fees, rewards are generated for users to claim based on the snapshot record of their holdings.

The design of Aegis avoids centralized risks and single points of failure:

• Unable to support coin
• No USDC reserves
• Do not rely on oracles
• Use only Bitcoin, hold off-exchange and monitor in real time.

To address the potential negative funding rates, Aegis has established an insurance fund:

• 1-5% of the earnings will be transferred to the fund
• Enable when funding fee turns negative
• Multi-signature contract management
• The future will be controlled by DAO.

Aegis places great importance on transparency:

• Custodial reserves are verifiable
• Exchange Position Disclosure
• API Open System Status

In addition to the insurance fund, Aegis has also launched a points system to promote growth. Users can obtain points through the following methods:

• Hold YUSD
• Provide liquidity
• Use lending services
• Complete social tasks

Points can be exchanged for AEG tokens proportionally. Early users can also receive additional rewards.

Aegis is an innovative project that aims to build a stablecoin that does not rely on fiat currencies, oracles, or permissioned collateral. While its performance in turbulent markets and large-scale applications still needs to be validated, this is one of the clearest attempts to design a currency based on Bitcoin to date.