Introduction

Welcome to the SMPL documentation. Here you'll find comprehensive guides and documentation to help you start working with SMPL as quickly as possible.

What is SMPL?

SMPL is a price-stable but supply volatile cryptocurrency that targets the CPI-adjusted dollar. It is used as a unit of account and collateral asset.

Key Features

  • Price-stability through supply adjustments
  • Non-dilutive supply
  • Robust rebasing mechanism
  • Decentralized Oracle

Elastic Supply

SMPL's elastic supply mechanism is the core feature that enables price stability without collateralization.

How it Works

When demand for SMPL changes, instead of the price changing, the protocol adjusts the supply of tokens in every wallet proportionally.

Supply Adjustments

  • Positive Rebase: Supply increases when price > $1
  • Negative Rebase: Supply decreases when price < $1
  • No Rebase: Supply remains stable when price ≈ $1

Rebase Mechanism

The rebase mechanism adjusts the token supply based on price data from trusted oracles.

// ExSMPLe rebase calculation
const targetPrice = 1.0; // CPI-adjusted USD
const currentPrice = 1.5; // Current market price
const deviation = currentPrice / targetPrice;
const rebaseFactor = Math.log(deviation) / Math.log(2);

Rebase Schedule

  • Occurs once every hour
  • Based on volume-weighted average price
  • Applies to all holders proportionally

Price Oracle

SMPL uses a decentralized oracle network to obtain reliable price data for rebasing.

Oracle Features

The oracle system aggregates price data from multiple sources to ensure accuracy and reliability.

// Accessing oracle data
const oracle = await SMPL.getOracle();
const price = await oracle.getData();
const sources = await oracle.getSources();
const lastUpdate = await oracle.getLastUpdate();

Supply Policy

The supply policy governs how SMPL's total supply changes in response to market conditions.

Key Components

  • Target Price Band
  • Rebase Thresholds
  • Supply Adjustment Formula
// Supply policy parameters
    const PRICE_BAND = 0.05; // ±5% threshold
    const MAX_SUPPLY_INCREASE = 0.10; // 10% max increase
    const MAX_SUPPLY_DECREASE = 0.10; // 10% max decrease

Treasury

The SMPL protocol incorporates a 10% transaction tax, which is strategically allocated to ensure long-term price stability and ecosystem sustainability.

How the Treasury Works

The collected 10% tax on each transaction is accumulated in the SMPL Treasury, primarily in SOL, and is utilized as follows:

Buyback and Burn Mechanism

If the SMPL price falls below the target price, the protocol automatically utilizes the accumulated SOL to buy back and burn SMPL tokens. This reduces the circulating supply, applying deflationary pressure to restore price equilibrium. The buyback and burn mechanism ensures SMPL remains aligned with its CPI-adjusted dollar target.

About the SMPL Protocol

The SMPL protocol is a set of instructions on the Solana blockchain that produces a decentralized unit of account called SMPL. The SMPL token is the primary building block of the SMPL Elastic Finance Ecosystem. It is used for lending & borrowing, for the creation of derivatives, and as collateral for a decentralized stablecoin.

How the SMPL Protocol Works

The SMPL Protocol targets the CPI adjusted US dollar and automatically expands or contracts the quantity of tokens in user wallets based on price. Think of SMPL as similar to Bitcoin, except the number of SMPL tokens in your wallet increases when there's more demand and decreases when there's less demand.

Applications and Use Cases

Price volatility prevents modern day cryptocurrencies from functioning as units of account. This function of money is important because it enables the denomination of predictable contracts that can serve as the basis of more complex banking systems.

Decentralized Lending

SMPL eliminates dependency on centralized stablecoins and enables sustainable lending and borrowing on decentralized lending platforms. When a loan is denominated in SMPL, borrowers can be reasonably certain that the cost of repayment will be stable in the long run due to SMPL's mean-reverting price.

Decentralized Derivatives

SMPL enables the creation of on-chain derivatives without added oracle risk. For exSMPLe, the protocol allows splitting the stock-volatility of SMPL into senior (low-risk) and junior (high-risk) tranches through smart contracts.

Decentralized Stablecoin Collateral

Senior tranches of SMPL derivatives can be used as transparent and robust collateral for crypto-collateralized stablecoins. This reduces reliance on centralized stablecoins as collateral, making the system more decentralized.

Oracle Risk Management

The SMPL protocol accepts price data through a network of Oracles. While Oracle attacks can temporarily affect supply adjustments, the protocol's proportional and non-custodial nature ensures that no funds can be stolen or redistributed through Oracle manipulation.

Additional Protocol Details

  • Supply adjustments (rebases) occur every hour
  • Rebases only trigger when price deviates by > 5% from target
  • Supply changes are proportional and non-dilutive
  • Users maintain their percentage ownership unless they trade

Glossary

A glossary of terms commonly used when describing the SMPLeforth Ecosystem

Derivatives

Derivates are a specific type of financial asset whose value depends solely on an underlying financial asset.

Stablecoin

Stablecoins are cryptocurrencies designed to be a refuge from volatility. The most common types include fiat collateralized stablecoins, crypto-collateralized stablecoins, and algorithmic stablecoins. Although SMPL has a price target, it should not be considered a stablecoin because holders of the token experience supply volatility comparable to that of a typical floating price token.

Store of Value

In economics, store of value is a monetary function. A store of value is an asset, commodity, or currency that can be saved, retrieved, and exchanged in the future without deteriorating in value.

Unit of Account

In economics, unit of account is monetary function. Money acts as a standard measure and a common denomination of trade. It is thus a basis for quoting and bargaining of prices. It is necessary for developing efficient accounting systems. More than a measure, the unit of account is the actual asset tendered upon completion of an agreement. SMPL is a unit-of-account token.