In the crypto market, stablecoins represent a unique form of cryptocurrency. Their inception reflects the early interactions and connections between cryptocurrencies and fiat currencies, while their evolution showcases a trend toward diversity. The realm of stablecoins has expanded to encompass over-collateralized, algorithmically stable, and hybrid variants.

Stablecoins are typically pegged to a specific type of asset. Among these, the USDT is most familiar to crypto users, emerging as a popular and mainstream stablecoin pegged to the U.S. dollar. Beyond being solely linked to the dollar, the crypto market has seen the emergence of a multitude of stablecoins anchored to other major currencies for value support, thereby stabilizing their exchange rates with the dollar.

During a period of explosive growth for stablecoins, the crypto market saw a variety of different stablecoins. Some demonstrated technical principle variations, while others differed regarding the underlying stable assets they were pegged to. However, they all share one characteristic: they are all tied to an asset type that either enjoys broad consensus or offers a degree of stability.

In this context, Redacted Cartel once enjoyed a moment in the limelight, but the stablecoin products they promoted did not become mainstream.

However, Redacted Cartel recently introduced a new stablecoin product, attracting lots of attention.

What is DINERO?

Stablecoins play a critical role in the cryptocurrency market, providing a relatively stable trading medium for holders. Recently, Redacted Cartel has introduced a novel stablecoin, DINERO, which is overcollateralized and backed by Ethereum (ETH).

In the broader vision of Redacted Cartel, DINERO signifies more than just a stablecoin—it represents a monetary experiment. The stablecoin is created through an over-collateralization process wherein users pledge ETH to create pxETH. This requires users to interact with the DINERO protocol for validation and ultimately supports the high-level RPC of Redacted’s relay.

Intriguingly, the protocol also encompasses DINERO’s liquidity pledged derivative—LSD, which entails Redacted Cartel’s partnership with other similar ETH collateral protocols.

In this yet-to-be unveiled stablecoin economic model, DINERO is poised to become a stablecoin jointly supported by ETH and pxETH. This is facilitated by the inherent blockchain network of Ethereum, without the need for permit verification. Furthermore, DINERO will closely align with the platform’s ecosystem, ultimately achieving a stable exchange ratio of 1:1 with the US dollar.

A Brief Overview of Redacted Cartel

Before delving into the specifics of DINERO, it’s crucial to acquaint oneself with some basic information about Redacted Cartel. The company has previously embarked on various experimental projects regarding stablecoin protocols.

The Exploration of the OHM Model

The cryptocurrency market has evolved substantially since the inception of Bitcoin (BTC) over a decade ago. With Decentralized Finance (DeFi) gaining widespread recognition as an innovative financial system, the development of stablecoins has transitioned into a new phase. Industry practitioners are now striving to stabilize the value of stablecoins, not merely from a technological perspective.

Many stablecoin projects have pivoted towards referencing mechanisms from the traditional financial market, such as foreign exchange reserves and bond issuance, aiming to construct more resilient stablecoin varieties.

In the prevailing market conditions, OlympusDAO adopted a somewhat aggressive approach to promoting its stablecoin project OHM. In addition to issuing OHM on a decentralized basis, it also concurrently issued a bond tied to OHM as an asset reserve.

（Image sourc:coinchapter.com）

OHM is a stablecoin with fixed purchasing power, but it is also anchored to an equivalent proportion of the project’s bonds. When the price of OHM rises, they sell bonds to suppress the price of OHM, and when the price of OHM falls, they buy bonds to elevate the price of OHM. This economic model involves a dedicated capital reserve pool, essentially transforming tokens and injecting them into the reserve pool at a certain ratio. The project side adjusts the price of the stablecoin by issuing bonds.

This concept was rather advanced at the time. It not only began to draw on bond issuance and monetary reserve mechanisms in the traditional financial system but also involved aspects of economic governance in the DAO community. Therefore, it had a significant impact on subsequent projects, particularly those related to stablecoins.

This model was trendy in 2021, and under its influence, hundreds of similar projects were spawned. These were all experimental stablecoin projects influenced by the theory of OHM, and some project operators offered entirely unrealistic APYs to attract investors.

However, most of these projects have disappeared due to their own issues or market changes, and only a few project operators have maintained their stablecoin projects of this type to the present day. Redacted Cartel is one such example. \

Continued Explorations of the Redacted Cartel

The stablecoin economic model pursued by OHM theoretically belongs to a realm of isomorphic assets that constrain and support each other. However, its operation mode encounters several challenges.

The initial concern is the issue of centralization, arising from the fact that both the stablecoin itself and the bonds are all issued by the same project party. In an environment teeming with similar projects, it becomes arduous to attract user participation.

Next comes the value problem of OHM itself. Though digital assets, including bonds, exhibit differing information on the blockchain network, they fundamentally cannot be classified as mainstream stable assets with widespread consensus.

Finally, although several projects have attempted to dynamically adjust the stablecoin price according to market conditions by pledging other crypto assets and combining trading liquidity, this approach can often lead to a “death spiral” due to market volatility. A palpable example of this is TRON and its associated USDD, illustrating that this method necessitates the backing of more stable digital assets with higher fault tolerance.

Given these considerations, the Redacted Cartel has embarked on numerous trials and experiments.

Product Portfolio

Since its inception in December 2021, Redacted Cartel has released two products, Hidden Hand and Pirex, as part of its DeFi product portfolio. The main objective is to bolster on-chain liquidity and cash flow for DeFi protocols.

By mid-2022, the Redacted Cartel team started preparing for its third product, DINERO, established as the native stablecoin of Redacted Cartel, and only recently began its issuance phase.

Although initially considered a follower of the OHM concept, the Redacted Cartel team swiftly expanded its horizons on the existing framework. Redacted Cartel aspires to be the interaction hub for a DeFi protocol in a particular ecosystem and control ample liquidity. They initially chose the Curve Finance ecosystem to commence their preliminary layout.

Hidden Hand, the first product from Redacted Cartel launched in April 2022, emphasizes optimizing the trading process. Hidden Hand is an intermediary market or an entrusted investment platform designed to help DeFi protocols maximize interaction processes and trading efficiency, enhancing intermediate trading links.

（Image sourc:defidaonews.com）

The platform governance token, Btrfly, is used to pay fees for DeFi protocols, incentivizing certain voting behaviors by token holders for their own benefit. Through Hidden Hand, users delegate their governance tokens and voting rights. Concurrently, DeFi protocols deposit Btrfly into the Hidden Hand platform contract.

Subsequently, Hidden Hand allocates earnings based on voting results, generating maximum Btrfly returns for users. In this process, the Redacted Cartel charges a fee, which ultimately flows into the treasury as a reserve.

Hidden Hand initially incorporated three renowned DeFi protocols: Frax, Ribbon Finance, and Balancer, later expanding to more than ten.

The subsequent product, Pirex, focuses on the staking, liquidity, and yield of governance tokens, initially operating with Convex’s token CVX. Users can stake CVX to obtain vlCVX, and Pirex allows users to participate in Convex governance and earn yield through voting.

However, as vlCVX is non-transferable and primarily serves as platform reserves, Pirex introduced pxCVX, allowing users to stake CVX on the platform to acquire pxCVX, thereby participating in Convex’s reward yields.

In the further development of Pirex, Btrfly was included to provide users with more flexible investment methods and yield channels. Additionally, the scope of operations will expand, including more concentrated trading platforms such as DEX. Pirex directs 75% of the fees to the Redacted Cartel, distributed among the Btrfly liquidity pool and Redacted Cartel DAO reserves.

From this perspective, Redacted Cartel’s series of moves over the past two years have largely been about building and perfecting a platform, including attempts to incorporate other popular cryptocurrencies, but overall, they lean more towards experimentation.

Perhaps in pursuit of exploring stablecoin arrangements across different platforms and ecological application categories, Redacted Cartel subsequently set its sights on Ethereum, leading to the planning and attempts concerning DINERO.

The Problems DINERO Addresses

The inception of DINERO can be seen as the Redacted Cartel’s latest foray into the realm of stablecoin experimentation. Its purpose is to realize Redacted Cartel’s aspirations in the stablecoin sphere, going beyond addressing a singular issue.

Primarily, DINERO strives to establish itself as a widely accepted decentralized stablecoin. Regardless of its underlying architecture, DINERO’s foremost goal is to serve as a cryptocurrency entirely pegged to the US dollar. The choice of ETH or any other mainstream cryptocurrency merely represents the means to fulfill this ambition.

The choice of ETH as collateral support allows DINERO to tap into the broader value of Ethereum’s settlement layer, benefiting from its extensive application scenarios and communities. Choosing ETH as the value underpinning for DINERO positions it favorably to embrace a robust price adjustment scope in the future.

Furthermore, the remaining objectives include increasing the protocol revenue under the Redacted Cartel and securing more advanced blockchain development opportunities. Ethereum, with its unique application characteristics and industry standing, indeed presents an appealing choice for DINERO.

DINERO mints its supply using a reserve pool consisting equally of ETH and pxETH. The DINERO protocol garners earnings from the interest generated during the interaction between these two assets. The pxETH reserve pool adopts stricter risk parameters within the Redacted Cartel ecosystem, leading to lower liquidity. This deliberate move by the Redacted Cartel safeguards the value underpinning DINERO.

Such a pegged stability model helps maintain DINERO’s price at around 1 dollar. In addition to ETH and pxETH, it uses USDC as collateral to alleviate upward price pressures. It also leverages the extensive governance and ecosystem coverage of the Redacted Cartel to boost DINERO’s liquidity. This advantage is particularly evident in the stablecoin’s application layer.

The Detailed Features of DINERO

To better comprehend the intricate characteristics of DINERO, we need to establish the following points:

1. When users’ transactions are submitted to the Ethereum network, these orders are first deposited in the network’s memory pool, awaiting confirmation.
2. Validators of transaction orders will organize these transactions with all other nodes in the form of blocks.
3. The block space of Ethereum is somewhat limited, which makes the corresponding block network extremely valuable. This can be seen in the rise and fall of gas fees. Of course, Ethereum just recently completed a network upgrade, which also expands the transaction boundary.
4. Users who need to process transaction orders as soon as possible often choose to pay higher gas fees, which ultimately engenders a high-end block space market. DINERO, built on this foundation, will have a more robust economic model.

In contrast, Redacted Cartel is also building its own relay, which, when completed, can offer a series of new functions, including Meta transactions.

Meta transactions allow users to pay transaction fees with tokens other than ETH. Once the scale is large enough, DINERO can implement private transactions and order flow payments through pxETH’s block network space.

The beneficiaries of this process are not just DINERO itself. Due to its association with other digital assets under the Redacted Cartel platform, Btrfly will also be boosted, subsequently improving its pledge income.

From this, we can see that Redacted Cartel’s successive stages and corresponding product intentions in building its own stablecoin system can be viewed as fortifying the economic premise of the entire ecosystem, providing a stronger foundation for the launch of DINERO, the stablecoin, and adding the final piece of the crucial puzzle.

Analyzing the Strategic Layout of Redacted Cartel

Based on available information, Redacted Cartel represents a comprehensive ecosystem built on smart contract products, capable of providing on-chain liquidity, ecosystem governance, and cash flow for DeFi protocols.

Redacted Cartel has already developed two products, Hidden Hand and Pirex, and is now paving the way for the deployment of DINERO.

In the past, Redacted Cartel created its DApp, Btrfly, which allowed users to stake, earn rewards, and interact with governance proposals. In the future, it plans to establish a complete DeFi economic system through the strategic arrangement of DINERO.

Conclusion

Since its launch, Redacted Cartel has made remarkable strides in just a year or two. With two increasingly substantial products and the impending release of DINERO, Redacted Cartel is continually refining its strategic roadmap in the DeFi and stablecoin sectors.

If DINERO proves successful, Redacted Cartel, with its extensive platform applications and coverage, combined with the growing demand for Ethereum application layer transactions, is poised to ignite a new wave of enthusiasm in the crypto market.