Intro
Since our last development update on BCH Day, we've been working hard on building out the dapp for interacting with the ParityUSD protocol (and smart contracts). In today's blogpost we'll cover the three key functionalities which will be offered by the ParityUSD dapp: the ability to 
Borrow, 
Stake and 
Redeem.
A Decentralized Stablecoin
ParityUSD, ticker PUSD, is the name of our upcoming decentralized stablecoin on Bitcoin Cash, which users can hold or transfer directly in their CashTokens wallet! ParityUSD is also the protocol and set of smart contracts which enables the stability for the PUSD token. This protocol enables some key financial functionalities.
Of course, users who are mainly interested in the stablecoin aspect can send or receive PUSD without using the extra functionality of the protocol and the ParityUSD dapp. Users can also simply exchange their BCH for PUSD (or reverse) using existing CashTokens DEXes (or Marketplaces).
The financial functionalities enabled by the ParityUSD protocol are the ability to Borrow, Stake and Redeem. These will be the features offered by the ParityUSD dapp. In the next sections we'll talk through each of these features individually.
Borrow
The ability to borrow against your Bitcoin Cash is the 1st functionality enabled by the ParityUSD protocol and which will be available in our dapp. ParityUSD stablecoins enter circulation by users creating over-collateralized loans with the ParityUSD smart contract system. This means that BCH holders can borrow against their holdings and get liquidity without having to sell their Bitcoin Cash.
Remember, ParityUSD stablecoin holders and users do not need to worry about these extra features if it does not appeal to them. There's always the core send/receive stablecoin functionality which does not require the ParityUSD dapp. Trading ParityUSD for BCH will be done through DEXes and CEXes, not through the ParityUSD dapp.
Borrowing against your BCH with the ParityUSD protocol will have a minimum collateral ratio of 110%. You will be able to add or withdraw collateral to your loan any time (subject to this 110% minimum requirement). Further, you can partially repay your loan when convenient. Interest is charged in BCH and deducted from the loan's BCH collateral over time according to the loan's configured interest rate. The interest payments are made on a daily basis and similarly loan owners will able to change their configured interest rate on a day-to-day basis.
Stake
The ability to stake PUSD and earn BCH over time is the 2nd feature enabled by the ParityUSD protocol and which will be available in our dapp. When you stake PUSD you add liquidity to the ParityUSD StabilityPool, for this you receive a staking receipt. This receipt can be handed in to withdraw your staked PUSD from the pool back to your wallet.
The BCH earned from staking are the interest payments made by the loans. The Staking rewards get sent from the StabilityPool to a Payout contract roughly once every 10 days (the duration is measured in blocks internally). Payouts always happen at the end of this 10days time, which we call an "epoch". Meaning in a full year there will be roughly 36 epochs and thus 36 staking Payouts.
The StabilityPool also has the function to liquidate under-collateralized loans, for this it uses the staked ParityUSD and in return takes the loan's BCH collateral. This means that staking PUSD can convert some of your PUSD into BCH over time as liquidations happen, so it is not entirely risk free.
Redeem
The ability to redeem PUSD for the underlying BCH is the 3rd feature enabled by the ParityUSD protocol and which will be available in our dapp. During normal operation of PUSD you can simply sell PUSD on the open market and receive 1$ worth of BCH for each PUSD. However, when the peg is under pressure, you can also redeem your PUSD directly to an existing loan. We explain this in more detail in our blogpost on the ParityUSD stability mechanism.
The redemption mechanism then is a very important fallback case to protect the peg of the ParityUSD stablecoin. The redemption process takes roughly 2 hours (again, measured in blocks) and the price is only finalized at the very end. This delay is present to guarantee the working of the redemption system without enabling or incentivizing any adversarial behavior.
Functionalities for Different Users
Our upcoming dapp will enable users to Borrow, Stake and Redeem. We expect Borrowing to be popular with Bitcoin Cash users who wish to get liquidity against their BCH holdings without selling their BCH. We expect Staking to be popular with users holding existing stablecoins without yield and with PUSD holders who want to earn some yield over time. Lastly for Redeeming, it is an important option for active traders/arbitrageurs when ParityUSD is trading below par, but for most users we expect DEXes to be the primary place to convert PUSD back to BCH.
Join the Conversation
Stay informed about our progress and dive deeper into the details of the ParityUSD project by following our updates. We invite you to be part of the discussion and join the community.
- Follow ParityUSD on X: x.com/ParityUSD
- Join the ParityUSD group on Telegram: t.me/parityUSD
In our Telegram group, you’ll have the opportunity to engage directly with the team and developers—ask questions, share your thoughts, and be part of the ongoing conversation as we build ParityUSD together!
