Benchmark Protocol: Bridging Traditional Finance and Crypto with Supply-Elastic Tokens

Rethinking Supply-Elastic Tokens

In the ever-evolving world of decentralized finance (DeFi), Benchmark Protocol is taking the cryptosphere by storm with its innovative approach to supply-elastic tokens. Unlike other DeFi projects that merely ride the wave of popularity, Benchmark Protocol aims to strike a balance between traditional finance and the burgeoning crypto market. This is done through a refined rebase algorithm originally introduced by Ampleforth, designed to adapt swiftly to market dynamics.

The Magic Behind MARK Tokens

The heartbeat of the Benchmark Protocol is its MARK tokens, whose supply is meticulously adjusted based on the CBOE Volatility Index (VIX), often referred to as the “fear index.” By aligning the adjustments of MARK tokens with the VIX, the protocol aims to create a smarter and faster supply response, thereby enhancing the stability of the asset. It’s like having a trusty weather vane to predict the market storms ahead!

Aiming for Stability with SDR

While most supply-elastic tokens set their sights on maintaining a target price of $1, Benchmark Protocol takes a different path. The target price for MARK is rooted in the Special Drawing Rights (SDR), a composite international reserve asset. This unique approach champions the SDR as the world’s most stable currency, representing a basket of five major currencies: the dollar, euro, pound, yuan, and yen. This multifaceted exposure equips MARK holders with a diversified risk profile compared to traditional stablecoins.

Mitigating Volatility with Agile Adjustments

What’s the consequence of spikes in the VIX? In the world of Benchmark Protocol, increased volatility leads to a corresponding increase in the supply of MARK tokens. This mechanism is designed to mitigate the fallout from liquidation events and serves as a hedging strategy. With supply rebalanced within five hours after the New York Stock Exchange closes—because we don’t want any spontaneous weekend revivals in the market—the protocol cleverly aligns crypto operations with traditional capital markets, minimizing any chances for arbitrage shenanigans.

Why Choose MARK Over Traditional Stablecoins?

Crypto enthusiasts looking for an alternative to traditional stablecoins will find MARK appealing for several reasons:

• Global inflation risk profile: Instead of being tied to a single currency, MARK holders can enjoy a broader exposure across multiple economies.
• Shielded against inflation: Unlike stablecoins that might collapse if their collateral becomes worthless, MARK provides a buffer against inflationary pressures.
• Addressing collateralization risk: Holding MARK means transferring reliance away from uncertain collateral that might backfire.

Additionally, Benchmark Protocol has rolled out a comprehensive liquidity pool rewards program known as The Press and introduced single-asset staking. With trading pairs like MARK-ETH and MARK-USDC now on Uniswap, more pairs are expected to follow, expanding the accessibility and usability of MARK in the crypto market.