Seigniorage Profit Growth Based on US Dollar Bill (USD) Issue*
If you already have CENTUS, you can use it to issue USD (up to 3 times more than available CENTUS amount allows), then swap the whole amount of USD for CENTUS and, thanks to that, receive more seigniorage (dividend) on this increased CENTUS amount.
Issuing USD, you increase your CENTUS amount by 2-3 times. Accordingly, your profit from seigniorage increases proportionally, while all your expenses are the interest you pay for using USD.
All funds remain under your control, you simply can not withdraw assets from your multisig account until you repay USD.
If you create USD against CENTUS collateral, you will at least receive doubled amount of dividends (seigniorage) during the entire period of using USD.
You just get profit from seigniorage 2 times a week paying an interest for using USD from this income. Generally, this interest is much lower than CENTUS seigniorage.
When you want to repay all or part of your USD, you simply swap the required amount of CENTUS for USD at Stellar DEX (Exchange) from your multisig wallet (we always confirm transactions in both directions).
After that you send USD to a special Stellar address specified in the repay form. Once the USD is repaid, you can send all the assets from your multisig account to your regular Stellar address along with the accumulated profit.
In addition, you can withdraw the accumulated profit from your multisig wallet twice a week.
How Should I do to Issue USD?
Only 3 steps are needed to issue USD secured by CENTUS as collateral:
OPTION 1: The amount of collateral of 10,000 CENTUS is equal to 100 USD issue amount.
1. Create an offer to issue 100 USD and then send a collateral in amount of 10,000 CENTUS to your multisig account.
2. You will receive your issued 100 USD to your multisig Stellar address once we check the collateral is received.
3. Then swap 10,000 CENTUS for 100 USD on Stellar DEX (Exchange) and get doubled seigniorage (profit) for all the time you use USD.
IMPORTANT: You must go to the Swap section and swap CENTUS for USD instead of selling it, otherwise transactions from a multisig account will fail.
Now let’s look at the case when you issue 100 USD – the amount of collateral is equal to the USD issue amount.
You have the collateral amount equal to 10,000 CENTUS (approx.100 USD) and create 100 USD.
Suppose you get seigniorage (dividend) 2 times a week in the amount of 1.5% each time, 3% in total.
1. You swap 100 USD you created for another 10,000 CENTUS on Stellar DEX (Exchange).
2. Now you have 20,000 CENTUS in total.
3. Given that you get 12.6% monthly, your profit on the amount of 20,000 will be 2,520 CENTUS or 25,2 USD.
4. After a month, you have a total of 22,520 CENTUS or 225.2 USD in your hand.
5. To pay back 100 USD and repay interest for using USD (0.5% every Tuesday and Friday = 4% or 4 USD for a month), you swap 10,400 CENTUS on the exchange and get 104 USD.
6. 225.2 USD – 104 USD = 121.2 USD (12,120 CENTUS) – balance on hand after returning USD.
7. Total monthly profitability is 21.2% or 21.2 USD on the initial 100 USD – Almost 2 times higher profitability thanks using 100 USD you created!
OPTION 2: The issue amount of 200 USD is three times the collateral amount of 10,000 CENTUS.
The second option does not differ from the first, except that your profit increases almost 3 times.
1. You have collateral of 10,000 CENTUS (approx.100 USD) and, additionally, create 200 USD.
2. On Stellar DEX (Exchange), you swap 200 USD you created for another 20,000 CENTUS.
3. Now, you have 30,000 CENTUS in total.
4. Given that you get 12.6% for a month, your profit on the total amount of 30,000 will be 3,780 CENTUS or 37,8 USD.
5. After a month, you have a total of 33,780 CENTUS or 337.8 USD in your hand.
6. To pay back 20,000 CENTUS and repay interest for using USD + 4% of the issued 200 USD, you swap 20,800 CENTUS on the exchange and get 208 USD.
7. 337.8 USD – 208 USD = 129.8 USD (12,980 CENTUS) – balance on hand after returning USD.
8. Total monthly profitability is 29.8% or 29.8 USD per 100 initial USD – almost 3 times higher profitability by using the 200 USD you created!
1. You need a multisig account to issue USD. How to set up multisig account look here
2. You can issue USD for an amount of 100-200% of available CENTUS collateral.
3. The fee for issuing US Dollar Bill is 1% of the issue amount.
4. The maximal time limit for using USD is set to 1 month.
5. The floating interest rate for using USD determined by the BILLEX network members is paid at the time of repayment (0,5% for each seigniorage accrual during the test period).
Risk Warning: The more percentage you specified, the greater the amount issued, the, correspondingly, higher the income received from seigniorage, but also the higher the risk of loss in case of a potential drop in the seigniorage rate.
*All figures in the examples are for illustrative purposes only. Seigniorage rate, as well as returns may change both upward and downward.