WHITEPAPER
INTRODUCTION
Source Protocol is a multi-chain and interoperable DeFi ecosystem with automated protocols designed for users to borrow and generate passive earnings with ease. The protocol is composed of a "DeFi Toolbox" where users can easily collateralize digital assets to access instant liquidity and earn passive rewards from lending, holding and staking, all within a decentralized ecosystem. Source Protocol is a comprehensive, non-custodial, permissionless, and borderless DeFi solution.
Fast transaction speeds, minimal gas fees, scalability, interoperability, ease of use, solvency, and self-sustainability are the values that guide the processes and strategies behind Source Protocol’s ecosystem.
Users of the Source ecosystem benefit from competitively low fees on digital asset loans, high interest rates on lending and staking, a uniquely large variety of compatible chains and assets compared to what’s currently available, and a safer and more secure transactional environment. Source is creating an ecosystem to fuel unlimited DeFi participation for retail investors and institutions alike.
ROOM FOR GROWTH IN CRYPTO
The Source team has a combined 30 years of experience in blockchain technology and cryptocurrency markets and its founders have been active since 2013. Through this experience, the team has come to recognize the potential benefits and drawbacks that various cryptos/blockchains have to offer. While many of these technologies are showing great promise, it is undeniable that the vast majority of crypto assets have a variety of issues that continually prevent further adoption. Slow transaction speeds, expensive gas fees, network congestion, lack of scalability, 51% attacks, centralized exchange hacks, minimal interoperability, and billionaire influencer tweets etc. have plagued the market since its inception. On top of that, a major lack of solvency and self-sustainability with prominent protocols has become very clear. Evidence of this fact is arguably more visible due to the hype and what many would consider extreme over-valuations of “meme coins” and NFTs. This is due to an irrational market lacking a presence of real utility and a dominant technology.
Despite the challenges that plague the crypto market, the Source team embraces the evolution and benefits of various blockchain technologies to date. The team’s vision is to create a continuously evolving and all-encompassing DeFi solution that unites state of the art technologies by developing a synergetic, decentralized, and multi-chain ecosystem for beginners and experts alike. Fast transaction speeds, minimal gas fees, scalability, cross-chain interoperability, ease of use, solvency, passive returns/rewards, real world NFT use-cases, and sustainable growth are the cornerstone values that guide the direction of the systems and strategies behind Source Protocol.
When it comes to blockchain technology, Bitcoin has proven to be king in the store of value category, and Ethereum is the leader in smart contract capabilities. Unfortunately, the slow transaction speeds of Bitcoin and Ethereum’s ever-increasing gas fees have hindered institutional development and excluded many retail investors from being able to utilize various DeFi DApps and products. This lack of scalability has culminated in a new “race to build the modern railroad,” with competing layer one blockchain technologies such as Cardano, Polkadot, Solana, Polygon, Avalanche, Binance Smart Chain, and Cosmos all trying to build the most efficient, secure, and affordable blockchains available. From a business perspective, the market will continually seek out ecosystems that excel in these categories. For this reason, Source is implementing the latest and greatest tech, and is built to be adaptable as the space iterates and improves over time.
OUR VISION
Our vision is to usher in a new economy for retail investors and institutions alike, fueled by a self-sustainable, solvent, automated, interoperable and secure DeFi ecosystem.
As a team of experienced finance professionals, developers and DeFi experts, we are dedicated to fostering financial sovereignty by utilizing the power of DeFi to make traditional financial services accessible, efficient and private. Together we’re building a new protocol for reliable DeFi lending, borrowing and earning to support the next generation of individuals and institutions with complete ownership and control over their finances. At Source, we aim to create a place where everyone can enjoy the benefits of traditional banking and microfinance solutions, without having to give up custody of their assets and without having to interact with intermediaries. We’re creating an environment that empowers everyone with unrivaled economic freedom.
SOLUTION
To combat the challenges in the current DeFi market listed above, Source Protocol is launching an ecosystem composed of a variety of cohesive products across multiple chains, starting with Binance Smart Chain and the Cosmos Hub. The core tenants of Source’s solution set include:
The Future of Borrowing, Lending & Earning Source Marketplace users can easily access instant liquidity, collateralize digital assets, and earn passive rewards from lending, holding and staking. Built on Binance Smart Chain (the largest transactional network in crypto) and the Cosmos Hub (the first proven interoperable web3 chain ecosystem).
Automated Participation in DeFi Yield Markets Holders of Source’s native utility token, SRCX, earn automated APY rewards (reflections) from a basket of blue-chip stablecoins and crypto smart contract lending positions, allowing users to participate in DeFi yield markets via one token.
Solvent, Self-Sustainable & Safe Ecosystem Source’s Dynamic Compound Liquidity Pool (DCLP) captures transaction fees that are automatically locked in auto-compounding liquidity pool smart contracts in Source Marketplace. This solvent growth mechanism continuously increases total-value-backing (TVL), overall liquidity and self-sustainability behind Source Marketplace.
Continuous and Automated Value-Backing Liquidity pools are used throughout Source Protocol's functions to create more value.
Ever-Increasing Solvency transaction fees are automatically sent back into the protocol creating solvent growth with each transaction.
Non-Custodial Lending earn APY without giving up control of your crypto in the Source Marketplace. Every transaction is done through smart contracts. You stay in control.
Non-Custodial Borrowing & Instant Liquidity Borrow with no credit and collateralize your crypto in the marketplace while always staying in control.
Interoperability & Ability to Swap Assets from various chains coming soon
Proof of Stake & Institutional-Grade Validator Nodes coming soon
SOURCE PROTOCOL TOOLBOX
SOURCE CHAIN (SOURCE) - IBC capable, POS, solvent COSMOS SDK blockchain
SOURCE TOKEN (SRCX) - Automated Liquidity Pool Acquisition & DeFi Yield Token (BEP - 20)
THERMO (TMX) - Marketplace Governance & Earning Incentive Token (BEP - 20)
SOURCEUSD (USX) - Asset-Backed Stablecoin Token (BEP - 20)
PROCXSS (PRSX) - Merchant Processing Token (BEP - 20)
Source Token (SRCX)
SRCX is Source Protocol’s first automated liquidity acquisition and DeFi yield participation token. It will launch on the Binance Smart Chain (BSC). BSC hosts the top volume decentralized exchange in the world, Pancake Swap, where as of writing, supports $3 to 4 billion in 24h volume according to data from CoinMarketCap.com.
By simply buying and holding SRCX, users immediately start earning Static and Dynamic Compounding Reflection (DCR) rewards from the network. In addition to Reflection rewards, users benefit from an increasingly solvent network as SRCX’s transactional volume increases. This value growth occurs because a small percentage of every transaction is automatically positioned into a liquidity pool of stable coins, located in the Source Protocol Marketplace, where it accrues APY and compounds. This is called the Dynamic Compounding Liquidity Pool (DCLP). Trusted data provided by the ChainLink oracle is used to tell the protocol where to position the highest APY yielding assets. A percentage of this accrued APY is then automatically rewarded back to holders of SRCX as Dynamic Compound Reflection. This is all accomplished without the user ever being required to hand over custody of their funds.
Welcome to your automated DeFi yield solution!
SRCX FEATURES
The following section describes the full feature set of SRCX. SRCX is a deflationary smart contract protocol deployed on the Binance Smart Chain. It has six major features that when strategically combined make it very powerful.
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Static Reflection 3%
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Automatic Liquidity Pool 4%
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Dynamic Compound Reflection 3%
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Dynamic Compound Liquidity Pool
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Automated Burn Mechanism
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Auto-Adjusting Transaction Fee
1. STATIC REFLECTION
3% of every transaction is redistributed to all wallet holders, automatically, based on your proportionate wallet weight within the network. In other words, the percentage of total circulating supply that a user’s wallet holds. This incentivizes holding SRCX for earning rewards when you or others use the network, whether sending or receiving. The more volume transacted on the network, the more rewards you receive based on your wallet weight.
2. AUTOMATIC LIQUIDITY POOL
4% of every SRCX transaction is sent to a locked liquidity pool. From that percentage, half is sold into BNB and sent with the other half remaining in SRCX to a liquidity pool where it is locked for 4 years. This auto funding liquidity pool increases the buffer for price volatility and creates a growing price floor for the protocol. The goal here is to prevent the larger dips when whales decide to sell their tokens later in the game, which minimizes price fluctuation and maximizes stability.
3. DYNAMIC COMPOUND REFLECTION (DCR)
3% of every SRCX transaction is sent to the Dynamic Compound Liquidity Pool (DCLP), which is what makes SRCX truly unique. This feature is made possible due to the value-backing mechanism of the Source Marketplace and its ability to automate the positioning of the DCLP fees into preferential APY-generating Liquidity Pool smart contracts in Source’s Marketplace. As the DCLP positions generate APY, a portion of that APY is then reflected back as a 2nd reward to SRCX holders in the form of Dynamic Compound Reflection (DCR). This allows all SRCX holders to effortlessly participate in DeFi yield farming and liquidity pool positioning by simply owning SRCX.
4. DYNAMIC COMPOUND LIQUIDITY POOL (DCLP)
As stated above, a 3% fee on every SRCX transaction is automatically sold by the smart contract on PancakeSwap and sent into various liquidity pool positions in the Source Marketplace. These assets are then pegged to Source’s native stable coin, USX. This allows USX to run in partial conjunction with SRCX. This function creates a continuous flow of valuation into the Source Marketplace’s Total Value Locked (TVL). The more the network is used and transacted on, the stronger and more value-backed by liquid assets it becomes. These assets are also securely locked in auto-compounding liquidity pool smart contracts.
5. AUTOMATED BURN MECHANISM
SRCX was designed to have a deflationary burn function that reduces supply with every transaction. Because the SRCX burn wallet is the largest token holder, it receives the largest weight of static reflections as a result of the 3% fee taken out of every transaction and redistributed to all SRCX wallets. Despite its large holding of SRCX, the burn wallet has no private keys and essentially acts as a black hole. The coins in the burn wallet cannot be sold, spent, hacked, or extracted in any way, and are permanently removed from the circulating supply of SRCX. This automated deflationary mechanism decreases circulating supply with every transaction, which drives value up as the network grows and transaction volume increases. As the network matures, the burn address can be blacklisted and will no longer receive the largest percentage of static reflections. The weight of reflections the burn wallet was receiving will then be absorbed by a large community of holders which gives additional incentive to hold SRCX long term.
6. AUTO ADJUSTING TRANSACTION FEE
SRCX’s transaction fee will start at 10% (4% LP, 3% Static Reflection, 3% Dynamic LP) at launch to contribute and establish the Automated LP. After the first 30 days, the tax will remain at 10% as a base (4% LP, 3% Static Reflection, 3% Dynamic LP), and will remain at that rate until 24-hour transactional volume is greater than $1 million. Once volume hits $1 million, the Market Maker Volume Function (MMVF) will activate. This function will adjust tax in accordance to the increase/decrease of volume/price in order to allow higher volumes and less tax. This will be a major factor in incentivizing and enabling a continual increase in transaction volume as the network grows larger.
SRCX SMART CONTRACT
LACK OF SOLVENT AND SELF-SUSTAINABLE PROTOCOLS & DEFI MARKETS
Outside a small portion of stablecoins and market protocols such as DAI and USDC, the top 200 coins by market cap do not have their own liquidity backing and are rooted in easily manipulated and speculative psychological valuations. For that reason, these protocols and applications are completely reliant upon daily transaction volume, the support of centralized exchanges, and market participation, leaving them vulnerable to market instability, skepticism, slower adoption, volatile price fluctuations, and repeated calls for government intervention and regulation.
With this in mind, the Source team has architected a robust marketplace that functions in concert with SRCX and prioritizes solvency and automation. The concepts and functions have been in development since 2017, and will allow the ecosystem to absorb future institutional financial markets sustainably. This will set Source Protocol’s SRCX, Marketplace and Source Chain beyond the crippling speculative valuation of BTC and other digital assets. While speculation has its place in creating market volatility, a truly solvent protocol will continue to drive growth and valuation that is no longer purely speculative alone. The solvency of Source will ignite a path toward mass adoption of DeFi and the freedoms and benefits it can provide to the world.
SOURCE MARKETPLACE
Source Marketplace is a multi-chain, interoperable and decentralized peer-to-peer financial services protocol and application suite for lending, borrowing, staking crypto & other virtual assets like NFTs. Built on Binance Smart Chain and Cosmos HUB, Source Marketplace is being developed to be capable of supporting a variety of traditionally-siloed blockchains and over 150+ crypto assets. Equipped with automated proprietary protocols designed to achieve solvency and self-sustainability, Source Marketplace will be a safe and secure environment for retail and institutional users alike. This will lay groundwork for Source Marketplace to quickly become the largest liquidity hub in DeFi.
The marketplace currently supports blue chip crypto assets such as Bitcoin, Ethereum, XRP, Cardano, BNB, and various stable coins like DAI, TUSD, BUSD, USDT, and as mentioned above, has plans to support a variety of assets from several chains in the future. The total supplied marketplace asset value is what determines the marketplace protocol's TVL (Total Value Locked). The TVL is what supports the backing of Source’s native and decentralized stablecoin, SourceUSD (USX).
Market participants can lend and borrow against their collateralized digital assets and earn APY, or mint USX by-the-block within the marketplace. When assets are lent to the APY smart contract position, there is no time term or lockup period. The contract remains in interest gaining APY position as long as the user deems to acquire APY for their lent assets. Each digital asset has a specific collateralization ratio based on risk and volatility, which typically ranges up to 80%. Value can be collateralized against by any user's smart contract asset position at an interest rate with no term requirements. If and when the amount borrowed extends beyond the specific collateralization ratio, the loan will begin to accrue higher interest and can be liquidated by the liquidation engine. Source Marketplace allows access to instant on-demand liquidity, and allows the users to always retain custody of their funds.
Source Marketplace utilizes a native governance and reward token THERMO (TMX), a merchant processing token PROCXSS (PRSX), and a stable coin SourceUSD (USX) to support the various service offerings and functionality of the Source Marketplace ecosystem.
SRCX Integration
What makes the Source Marketplace unique in comparison to other DeFi money market protocols is the integration of the smart contract token SRCX. The DCLP function of SRCX integrates directly into Source Marketplace protocol, where it provides value-backing and liquidity in various digital assets. This function is an essential process that promotes and builds a self-sustaining and solvent network in SRCX, as well as supplies additional liquidity to the Source Marketplace.
Thermo (TMX)
TMX tokens are mined out and rewarded to the Source Marketplace Suppliers and Borrowers. This allows for fair distribution of TMX and allows it to be used for governance over the marketplace protocol.
Governance
TMX tokens are used for controlling governance over the Source Marketplace protocol. Holders of TMX tokens can vote on proposals that make changes to variables and parameters that control how the Marketplace functions, add new S Tokens to the marketplace, delegate protocol reserve distribution schedules, and adjust variable and fixed interest rates for assets and stablecoins. They are open to vote on for a period of 3 days after which they either pass or fail. If a proposal is passed successfully, the development team begins implementing the changes into the protocol which takes approximately 1 to 2 weeks. TMX tokens can also be delegated to active governance participants to vote on their behalf. A user must hold at least 300,000 TMX in order to submit a governance proposal.
sTokens
The Source Marketplace uses "sTokens" to represent a user's supplied collateral of a Binance Smart Chain asset. These tokens are smart contracts that act as a receipt of collateral that the user receives after executing a "supply" contract. They can be redeemed at a 1:1 value of their underlying asset in the marketplace protocol at any time by the user. These tokens are only redeemable in the underlying asset they represent. Therefore, sBNB can only be used to redeem BNB, sETH can only be used to redeem ETH, sADA can only be used to redeem ADA, etc.
For example, Bob supplies 1.5 BNB (smart chain network) to the marketplace protocol by approving and executing the BNB "supply" contract function with his Binance smart chain wallet. In return he will receive 1.5 sBNB that can be used at any time to redeem the original 1.5 BNB. When Bob is ready to claim his original BNB he can approve and execute the "withdraw" contract function. Once the withdraw contract is executed, Bob's 1.5 BNB is returned to him in exchange for his 1.5 sBNB that is simultaneously returned to the marketplace platform and burned.
Suppliers
Source Marketplace protocol suppliers are incentivized to supply their Binance Smart Chain digital assets to the protocol so they can earn APY. Suppliers receive sTokens as mentioned above in exchange for positioning their assets as collateral into the protocol. The value of collateral supplied is used to determine how much value the participant can then borrow. Supplied digital assets also earn APY at variable rates that are determined by market utilization.
Borrowers
Once a market participant has supplied digital assets as collateral, he/she will have the ability to borrow against that collateral. Collateralization ratios typically range up to 80% and are particular to each digital asset. The average collateralization ratio is 60%. So if Alice supplies $100,000 of digital assets to the marketplace protocol, she will typically be able to borrow up to $60,000 at an interest rate that is set by the protocol based on market utilization.
Risk & Liquidation
If a participant's borrow limit exceeds their collateralization ratio due to market volatility of their underlying assets, they are at risk of liquidation. For example, if Alice borrows 100% of her borrow limit of $60,000 and then her supplied collateral value drops to $95,000, a liquidation event will occur and use her supplied collateral to bring her collateral ratio back to 60%. Alice will also only be able to withdraw her supplied collateral when her loan is paid back.
Interest Rates
The Source marketplace protocol uses compounding interest rates to incentivize supplying and borrowing on the protocol. The interest rates are variable based on an asset's market utilization. When a supplied asset is under-utilized, its interest rate will increase to incentivize suppliers to earn a higher APY. When a supplied asset is over-utilized, the APY for supplying will be reduced. In contrast, when a borrowed asset is under-utilized, its interest rate will decrease to incentivize borrowers to borrow at lower rates. When a borrowed asset is over-utilized, its interest rate will increase as a way to incentivise borrowers to pay off their loans.
SOURCE USD (USX)
USX is Source Protocol’s Native Stable Coin. It is backed by a basket of crypto assets that are supplied by SRCX’s DCLP function and also by assets supplied by the Source Marketplace users. With our unique asset-backing mechanisms, USX will be a trusted and solvent stablecoin and hedge, not just for Source Marketplace, but the crypto ecosystem at large. USX is burned and minted to stabilize its valutation to the Total Value Locked within the Source Marketplace.
PROCXSS (PRSX)
Procxss is a utility token of the Source Marketplace that will be developed as an integrative solution for merchant processing and credit card payments. We plan on integrating a mobile DApp that allows fiat onboarding capabilities, as well as P2P payments within fiat and crypto. Procxss will enable crypto and non-crypto users to utilize blockchain transaction capabilities in and out of the Source Marketplace and various protocols.
SOURCE CHAIN (SOURCE)
A solvent growth and self sustaining smart chain network. Coming Soon…
