A Community-Written, Introductory Series — What is Shade?

Article #1

author: VJ

Shade Protocol is an array of privacy-preserving DeFi apps built on Secret Network. The privacy and auditability features of the network allow Shade Protocol to introduce powerful new applications to DeFi and PriFi (Private Finance).

The first element of Shade Protocol is a stablecoin called Silk. Historically, stablecoins have been tied to a single sovereign currency. However, Silk is an algorithmic stablecoin pegged to a basket of assets and currencies. This weighted index positions Silk to ‘shock absorb’ massive amounts of global volatility while maintaining stable value. Silk makes a legitimate claim to being/becoming the most stable asset on the planet.

Shade adds another layer of value to Silk by serving as its market-based stability mechanism. Shade and Silk exist in a symbiotic relationship. Similar to Luna/UST. If Silk is sitting above the predetermined peg, Shade holders can burn Shade to mint Silk. This is good for holders (rewards for arbitraging the market) and good for Silk (increased supply of Silk will correspondingly decrease the price and drive it towards the peg). Of course, these stability mechanics can work inversely also.

Minting Shade occurs through a zero slippage entry or bond by depositing SCRT (or, eventually, other IBC tokens) into the Shade DAO... Besides serving as Shade Protocol’s governance, the DAO holds assets, which are leveraged to provide additional value to Shade holders in many forms. All collateralized assets burned to mint Shade become a part of the DAO’s Synthesis Treasury.

Shade Protocol also includes a Synthetics Marketplace that employs the same stabilization mechanics as Shade/Silk. A synthetic asset like gold or Amazon will be pegged to its real-world price via Band Protocol’s oracle data. If the asset moves up or down from that peg, the holder of a stabilizer token could arbitrage the asset (as described with Shade/Silk dynamics). Entry to this synthetics market occurs via burning Silk. Since users are able to mint assets directly they avoid the vulnerabilities of leverage and liquidation.

The privacy, auditability, and usability of Shade Protocol bring stark improvements to stablecoins, DeFi, and synthetics. We know users will appreciate these robust benefits as they experience this ecosystem unfolding.

— — —

Join Our Communities Below:

https://linktr.ee/shadeprotocol

The information provided in this Medium Post pertaining to Shade Protocol, its crypto-assets, business assets, strategy, and operations, and is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this Medium Post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This Medium Post does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. Shade Protocol and its contributors and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and Shade Protocol expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. Shade Protocol core contributors reserve the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this Medium Post supersedes any prior Medium Post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither Shade Protocol nor any of its core contributors shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this Medium Post by you or any of your representatives or for omissions from the information in this Medium Post. Additionally, Shade Protocol core contributors undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this Medium Post.