Tower Finance
TOWER Stablecoin
Fractional-Algorithmic Stablecoin soft-pegged to the US Dollar

What is TOWER?

TOWER token is a Fractional-Algorithmic Stablecoin, soft pegged to the U.S. Dollar, available on the Polygon network. Tower is permissionless, and entirely on-chain – currently implemented on Polygon chains, plans to expand to multi-chain.
The protocol aims to maintain TOWER token’s price stability, in other words the peg, by storing sufficient collateral in the time-locked smart contracts. This collateral is used for redemption, helping to maintain price stability. The collateral consists of two tokens, USDC and IVORY token. The USDC is deposited into the protocol when a user mints TOWER token, while the IVORY token which is used for minting is burned. When the user redeems TOWER tokens, the protocol pays back USDC and mints the required amount of IVORY tokens.
  • Fractional-Algorithmic - TOWER is the stablecoin with parts of its supply backed by collateral and parts of the supply algorithmic. This means TOWER is the first stablecoin to have part of its supply floating/unbacked. Stablecoin design referenced Frax Finance and built the Tower protocol by improving the speed and stability of the blockchain. The ratio of collateralized and algorithmic depends on the market's pricing of the TOWER stablecoin. If TOWER is trading at above $1, the protocol decreases the collateral ratio. If TOWER is trading at under $1, the protocol increases the collateral ratio.
  • Decentralized & Governance-minimized – Community governed and emphasizing a highly autonomous, algorithmic approach with no active management.
  • Fully on-chain oracles – Tower Finance uses Firebird (TOWER and IVORY TWAP Price) and Chainlink (USD price) oracles.
  • Dual Token System – TOWER is the stablecoin targeting a tight band around $1/coin. IVORY is the governance token which accrues fees, seigniorage revenue, and excess collateral value.

A little more detail

At genesis, TOWER is 100% collateralized, meaning that minting TOWER only requires placing collateral into the minting contract. During the fractional phase, minting TOWER requires placing the appropriate ratio of collateral and burning the ratio of IVORY. While the protocol is designed to accept any type of cryptocurrency as collateral, this implementation of the TOWER Protocol will mainly accept on-chain stablecoins as collateral to smoothen out volatility in the collateral so that TOWER can transition to more algorithmic ratios smoothly. As the velocity of the system increases, it becomes easier and safer to include volatile cryptocurrency such as ETH and wrapped BTC into future pools with governance.
Last modified 4mo ago