Satoshi Protocol operates using an intricate system that guarantees the stability of the SAT token at $1. This system employs various mechanisms such as over-collateralization, permissionless liquidation, stability pools, and arbitrage. Moreover, it includes OSHI, a utility token that entitles holders to 97.5% of the protocol's revenue.

For more in-depth information regarding OSHI and sOSHI, please consult the official documentation: OSHI & sOSHI.

Distribution of OSHI

The relationship between SAT and OSHI lies at the core of the Satoshi Protocol. Here is a breakdown:

Secured borrowing

When users borrow SAT, they are required to maintain a minimum collateral ratio (MCR) of 110%. This ensures that the borrowed amount does not exceed 90.9% of the BTC value deposited.

Liquidating assets

A liquidation occurs if a user's collateral falls below 110% (MCR) due to market fluctuations. To repay the SAT loan, the user's BTC collateral is sold at a discounted rate to Stability Pool providers. This mechanism safeguards the protocol and deters borrowers from accumulating excessive debt.

Preserving the peg

SAT's value is effectively anchored to the US dollar using a strong three-part system:

Redemption: Arbitrage activities assist in stabilizing the price of SAT within the desired threshold. If SAT falls below $1, arbitrageurs can purchase discounted SAT and redeem them for BTC valued at $1 from the protocol. Conversely, if SAT exceeds $1.1, users can borrow SAT at the MCR (110%), sell them at a premium on decentralized exchanges, and earn a profit.

Over-collateralization: Over-collateralization, set at the MCR of 110%, functions as a protective barrier. By demanding a higher collateral value, the protocol discourages defaulting by borrowers and shields itself from price fluctuations.

Stability Pool: Serving as a final safety net, the Stability Pool supplies the required liquidity to facilitate liquidation events and maintain the stability of the protocol.

Overview of Satoshi Protocol

Pioneered on BEVM, it stands as the first CDP protocol unlocking the full potential of Bitcoin. By introducing SAT, a stablecoin primed to invigorate the thriving BTCFi market, the protocol aims to unleash unparalleled liquidity opportunities.