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How DOLR Stable Works — Overview

DOLR Stable is a decentralized stablecoin system backed by Ethereum (ETH) collateral. It allows users to borrow stable DOLR tokens by locking ETH in a secure smart contract vault, maintaining a stable value pegged to the US Dollar (USD).

Core Concepts

  • Collateralized Debt Positions (CDPs): Users deposit ETH as collateral into vaults to mint (borrow) DOLR tokens.
  • Collateralization Ratio: To keep the system secure, vaults must maintain a minimum collateralization ratio (e.g., 160%). This means the value of ETH collateral must always exceed the debt value by at least 60%.
  • Price Oracle: The system relies on Chainlink’s ETH/USD price feed to accurately value collateral in real-time.
  • Borrowing & Repayment: Users borrow DOLR tokens against their ETH collateral and repay to unlock their ETH.
  • Liquidation: Vaults that fall below the required collateralization ratio are subject to liquidation to protect the system’s stability.
  • DOLR Token: An ERC20 stablecoin minted and burned by the vault manager contract based on borrowing and repayment.

How It Works — Step by Step

  1. Deposit ETH: Users deposit ETH into a vault smart contract.
  2. Mint DOLR: Users borrow DOLR tokens up to a safe borrowing limit determined by their collateral value and the collateralization ratio.
  3. Use DOLR: Borrowed DOLR tokens can be used as a stable medium of exchange, traded, or held as stable assets.
  4. Monitor Vault Health: The system continuously monitors the ETH price and vault collateralization.
  5. Repay Debt: Users repay DOLR tokens to reduce their debt and withdraw ETH collateral.
  6. Liquidate Unsafe Vaults: If collateral value drops too low, vaults can be liquidated by third parties who repay the debt and receive discounted collateral.

Benefits of DOLR Stable

  • Decentralized: No central authority controls DOLR; all actions are enforced by smart contracts.
  • Secure & Transparent: Uses audited smart contracts and decentralized oracles for price feeds.
  • Ethereum-Backed: Leverages the liquidity and security of ETH as collateral.
  • Stable & Reliable: Maintains a strong peg to the USD through over-collateralization and liquidation incentives.
  • Flexible: Users can borrow stablecoins without credit checks or intermediaries.
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