Introducing the FABRIC Protocol
TLDR: FABRIC is a synthetic asset issuance protocol that will allow users to gain exposure to a variety of asset classes otherwise unavailable on the Solana network.
Over the past year, we’ve seen Decentralized Finance (DeFi) progress from a buzzword to an entire ecosystem. By drastically lowering the barriers of entry to financial tools previously privy only to large banks, venture funds, corporations, and investment firms, DeFi has completely revolutionised the personal finance space.
Up to now, most of the growth in the DeFi space has occurred in legacy blockchains like Ethereum. Despite continual growth, anyone that was present in the space during the 2020 DeFi summer is aware of how restrictive these legacy blockchains are. With prohibitively high gas fees eating into profits and slow transaction speeds adding unwanted friction, the advancement of DeFi into other blockchains is paramount. With that in mind, today we’re proud to announce the launch of FABRIC, Solana’s premiere synthetic asset issuance protocol.
What is Fabric?
Built on the ultra-fast Solana ecosystem, FABRIC will allow users to mint, exchange and burn SPL Synthetic assets such as f-Uranium (fURA), synthetic tokenized Uranium, and f-Gold (fGOLD), synthetic tokenized Gold based on prices provided by a decentralized system of oracles.
All synthetic assets are collateralized by FABRIC tokens (FAB) which must be locked into the FABRIC debt pool to allow users to mint synthetic assets. As a result, users interact directly with the debt pool during trades. This means that no counterparties are required for trades whilst also mitigating common issues experienced on exchanges such as low liquidity or slippage.
What makes Fabric different?
The FABRIC team is taking multiple routes to engage with liquidity providers and attract users to the FABRIC ecosystem. These include:
- Multi-collateral support (supporting major wrapped tokens). Proven by FTX to attract users at least in the CEX realm.
- Wide range of SPL Synthetics, starting with fGOLD and fURA (expanding to other commodities, forex, index and inverse synthetics).
- Powered by Solana. Extremely cheap fees and high transactions-per-second.
FABRIC aims to include fiat currencies, cryptocurrencies, commodities, and inverse indexes. In principle, the FABRIC protocol can support any asset with a price providing on-chain exposure to an unlimited range of real-world assets.
FAB Token and its function
The FAB token is a core component of the FABRIC ecosystem and is required for staking, burning and minting to occur. FABRIC users can purchase FAB on a variety of exchanges, which they are able to stake in the Fsynth exchange to earn money and mint synths (more on that later).
Initially, a total of 250 million FAB tokens will be minted and released into circulation. The total FAB supply will increase from 250,000,000 to 500,000,000 with a weekly decay rate of 1.25% until December 2023. After which, there will be an annual 1% terminal inflation.
In addition to its role in the minting and burning of synths, the FAB token will also allow holders to vote on the direction of the FABRIC protocol.
When users stake their Fab tokens as collateral, they are acting as a pooled counterparty to all SPL Synthetics. Staking FAB tokens allows users to be able to mint synthetic assets at a 1000% collateral ratio.
In addition to being able to gain exposure to assets not currently available on the Solana ecosystem, stakers also receive benefits in three distinct ways:
Serum DEX rewards: When trading through the FABRIC Serum DEX UI, each trade includes a small fee for the GUI hoster available for FAB stakers to claim. This fee is 10 bps (0.1%) per trade and is distributed to stakers based on their staked proportion with respect to the total staked amount.
Mint/burn rewards: When minting or burning SPL Synthetics using the FABRIC dApp, an exchange fee is generated and sent to the fee pool. This fee is available for FAB stakers to claim each week. This fee is between 5–120 bps (0.05% — 1.2%) and will be displayed during any trade on Fsynth.Exchange.
Inflationary monetary policy: As mentioned above, the total FAB supply will increase from 250,000,000 to 500,000,000 with a weekly decay rate of 1.25% until December 2023. From December 2023, there will be an annual 1% terminal inflation. These FAB tokens will be distributed to FAB stakers weekly on a pro-rata basis provided their collateralisation ratio does not fall below the target threshold, further incentivizing FAB holders to stake their FAB.
We are currently:
- Building out a formal specification for the FABRIC protocol and prototyping implementations. You can find our documentation space at https://docs.fsynth.io/contracts/overview
- Implementing proof of concept staking of FAB-USDC LP tokens with per-block rewards
- Finalising UX for the Fabric dApp. A preview can be seen at https://twitter.com/0xDEADBEEFx/status/1400960509449588737
- Preparing to launch our Discord server
We are preparing to release staking by the end of Q2, and the FABRIC dApp (devnet only) by the end of Q3. You can find our current roadmap at https://docs.fsynth.io/resources/roadmap.
Interested in our project? Keep in touch!
Check us out on Twitter: @official_fabric