The implementation of RealEx protocol is based on a fork of Olympus Finance (Symbol: OHM) version 1, a secure protocol that provides the following key innovations in combination:
- Bonding and treasury growth mechanisms
- Treasury management, audit, staking and rebasing
- Treasury coins
- Protocol Owned Liquidity
Finally, the protocol will launch on Ethereum, and will be further expanded over time to other EVM compatible blockchains to connect with other liquidity ecosystems and for integration into other Defi products where RealEx tokens would provide increased utility.
The technical infrastructure coordinates the minting, burning, pooling, flow, and use of yield-bearing real estate assets and the RealEx steadycoin. A high level diagram of how the major technical components of the system operate is shown below.
Each component is described below:
- Bond Depository: The mechanism for depositing crypto assets and receiving RealEx tokens in return. The RealEx is delivered over a specified time period (e.g., 1-365 days), and is sold at a premium or discount to the market rate, subject to the parameters decided by Treasury management. The selection of crypto assets that can be bonded for RealEx is controlled through governance.
- Staking: The core staking and rebase mechanism implementing the DAO policies.
- Distributor: Handles the control and distribution of staking rewards per policy.
- Steadycoin Realizer: Converts stablecoin assets in the treasury into a liquid asset for trading by the RealEx DAO, providing a REALUD Treasury receipt.
- Treasury: The vault controlling all reserve assets (stablecoins and protocol owned liquidity). The contract supports the deposit and withdrawal of assets, and controls the minting of RealEx to reflect bonding as well as staking rewards.
- Allocator: Manages the yield farming of excess Treasury reserves.
The key tokens are:
- RealEx: ERC20 contract for the RealEx steadycoin, effectively reflecting the treasury floor value + premium placed by the market.
- sRealEx: ERC20 contract representing a claim on RealEx steadycoin, redeemable 1:1.
- RealUD: ERC20 contract representing a receipt of burned RealEx tokens.
The implementation of the economics of the RealEx steadycoin follow a set of formal rules. These are described in the next sections.
RealEx has an intrinsic value of 1 DAI, which is roughly equivalent to $1. In order to make a profit from bonding, Olympus charges a premium for each bond.
The premium is derived from the debt ratio of the system and a scaling variable called BCV. BCV allows us to control the rate at which bond prices increase. The BCV is the Bond Control Variable, the scaling factor at which bond prices change. A higher BCV means a lower discount for bonders and higher inflation by the protocol. A lower BCV means a higher discount for bonders and lower inflation by the protocol.
The premium determines profit due to the protocol and in turn, stakers. This is because new RealEx is minted from the profit and subsequently distributed among all stakers.
The debt ratio is the total of all RealEx promised to bonders divided by the total supply of RealEx. This allows us to measure the debt of the system.
Bond payout determines the number of RealEx sold to a bonder. For reserve bonds, the market value of the assets supplied by the bonder is used to determine the bond payout. For example, if a user supplies 1000 DAI and the bond price is 250 DAI, the user will be entitled 4 RealEx.
For liquidity bonds, the market value of the LP tokens supplied by the bonder is used to determine the bond payout. For example, if a user supplies 0.001 RealEx-DAI LP token which is valued at 1000 DAI at the time of bonding, and the bond price is 250 DAI, the user will be entitled 4 RealEx.
RealEx supply does not have a hard cap. Its supply increases when:
- RealEx is minted and distributed to the stakers.
- RealEx is minted for the bonder. This happens whenever someone purchases a bond.
- RealEx is minted for the DAO. This happens whenever someone purchases a bond. The DAO gets the same number of RealEx as the bonder.
- RealEx is minted for the team, investors, advisors, or the DAO.
At the end of each epoch, the treasury mints RealEx at a set reward rate. These RealEx will be distributed to all the stakers in the protocol. You can track the latest reward rate on the RealEx Policy dashboard.
Whenever someone purchases a bond, a set number of RealEx is minted. These RealEx will not be released to the bonder all at once - they are vested to the bonder linearly over time. The bond payout uses a different formula for different types of bonds. Check the bonding section above to see how it is calculated.
The DAO receives the same amount of RealEx as the bonder. This represents the DAO profit.
Every RealEx in circulation is backed by the RealEx treasury. The assets in the treasury can be divided into two categories: stablecoin and real estate.
The stablecoin balance in the treasury grows when bonds are sold. RFV is calculated differently for different bond types.
For reserve bonds such as DAI bond and MIM bond, the RFV simply equals to the amount of the underlying asset supplied by the bonder.
For LP bonds such as RealEx-DAI bond and RealEx-MUIM bond, the RFV is calculated differently because the protocol needs to mark down its value. Why? The LP token pair consists of RealEx, and each RealEx in circulation will be backed by these LP tokens - there is a cyclical dependency. To safely guarantee all circulating RealEx are backed, the protocol marks down the value of these LP tokens, hence the name risk-free value (RFV).
Swaps between RealEx and sRealEx during staking and unstaking are always honored 1:1. The amount of RealEx deposited into the staking contract will always result in the same amount of sRealEx. And the amount of sRealEx withdrawn from the staking contract will always result in the same amount of RealEx.
The treasury deposits RealEx into the distributor. The distributor then deposits ELX into the staking contract, creating an imbalance between RealEx and sRealEx. sRealEx is rebased to correct this imbalance between RealEx deposited and sRealEx outstanding. The rebase brings sRealEx outstanding back up to parity so that 1 sRealEx equals 1 staked RealEx.
The selection of crypto assets for bonding, bonding rates, and bonus community rewards are controlled by governance. The initial selection of these parameters will be communicated closer to the protocol mainnet with input from the community.