Introducing Continuous ESD.


ESD is our dollar.


  • Un-collateralized models have viral reflexivity which is essential for early growth of the project, but it becomes the biggest instability contributor as the project achieves critical mass.
  • Bonds suffer from the tragedy of the commons — they work well when issuance is low, but break down when there are no longer buyers of last resort large enough to stabilize the protocol.
  • Though noble, it’s intractable to decouple up and down regulation incentives in a one-token model without quite significant lockups.

Note: a full write up of ESD and our learnings will be published at a later date.


As such, Continuous ESD is a direct result of Scott Lewis, Will Price, and team’s V2 research, with additional contributions from the {ess}, Sn2, Jon Itzler, Ben Simon, Andrew Kang, Dan Elitzer, Jordan Clifford, Linda Xie, Tim Hawbaker, Dan Robinson, Yan Liberman, and many others.


Two-Token Model

  • Decouples incentive to lockup circulating supply from growth.
  • Decouples governance security from locked up circulating supply.
  • Enables a smooth issuance reset while maintaining equivalent ownership.


  • ESD can always be minted from the reserve for 1 USDC.
  • ESD can always be burned in the reserve for RR USDC, where RR is the current reserve ratio capped at 1.00.

Role of ESDS‌

  • Yield from reserve management.
  • Growth from reserve investments.
  • Revenue from ESD issuance after the target RR has dropped below 1.00‌.

ESDS can be minted by the reserve and sold when RR is below target.

Mitigating Bank Runs‌


Safely Experimenting‌

This model’s strategy is to initially start out fully or over-collateralized until an ancillary stability mechanism can be proven, at which point governance may reduce the target RR at its discretion to improve protocol efficiency.


Pending governance approval, Continuous ESD will launch early Q2 once the audit process is complete. A series of proposals will be made to v1 in parallel to prepare for the migration — additionally these proposals passing will de facto approve the Continuous ESD upgrade.


rebuilding finance from the ∅. 💔

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