SabeX: Let’s Beat Inflation

SabeX: The Money Market Protocol

SabeX is the money market protocol in De-Fi which solves all the current problems in De-Fi money markets by providing an interest rate mechanism which combines both the variable and fixed rate to provide a stable savings rate while providing individual rates while borrowing for different types of collateral.

SabeX will power the money markets for Xadewhere Xade will provide multiple money markets for different fiat pegged stablecoins where the savings rate is more than the CPI(Consumer Price Index) or inflation of the native region of the fiat to which the stablecoin is pegged(Eg.A USD stablecoin money market in Xade will provide a stable savings rate more than the CPI of The United States), while allowing the users to borrow against several type of assets such as ERC-20 Tokens and NFTs that are whitelisted by Xade with different interest rates based on demand and governance.SabeX also purchases whitelisted on-chain bonds to generate the yield if the yield from borrowing is not enough.

SabeX is heavily inspired from yield protocol and implements a mechanism similar to y tokens in yield protocol.

Xade V1 will initially accept USDC as deposit collateral while providing an interest rate higher than the inflation rate in the US with support for multiple whitelisted borrowing collaterals including tokenised RWAs which will keep updating as well as multiple money markets for different regions will be launched.

SabeX V1 will demonstrate the Savings Mechanism of SabeX with contracts that expire quarterly and have a very similar implementation to Yield Protocol.

We have partnered up with several projects to provide borrowing against tokenised real world assets.

The Xade Token Holders are eligible to vote on interest rate mechanism and whitelisting of collaterals and bonds on Xade.

What makes SabeX unique?

SabeX is our most innovative protocol with the most notable features being:

• The stable interest rate mechanism which combines both the fixed rate and variable rates in DeFi
• Creating savings accounts which take inflation as a metric before determining the interest rates
• Accepting tokenised RWAs as borrowing collaterals
• Introducing individual borrowing rates for seperate types of collaterals
• Buying onchain bonds with idle funds in a decentralised money market

Savings Rate

SabeX uses a stable interest rate mechanism which is a combination of fixed rate deposit and algorithmic interest rates.We aim to provide a stable savings yield to the depositors which is designed to be more than the 3 month rolling average of the CPI of the native region of the stablecoin.We have a fixed desirable rate known as the SabeX rate and a vr which adjusts according to the market conditions.When the vr is subtracted from the stable rate we get the actual savings rate. The SabeX rate will change every 3 months.

The SabeX Rate(SX%) is:

SX% = 1.3 . I%

Where I% is the 3 month rolling average of the CPI of the region provided by the oracles.

The Variable Rate(VR) can be calculated from the following formula:

VR= (1-u(t)) . SX%

Where u(t) is the utilization ratio between 0 and 1:

u(t)= Total Amount Borrowed / Total Amount Deposited

Therefore the Actual Savings Rate(S%) which the depositor will receive is determined by:

S%= SX% — VR

The Deposits will be lent out, but the depositors will be allowed to withdraw anytime until the liquidity reserve of the protocol reaches 2% of the total amount deposited.WIthdrawal before maturity results in a 0.2% penalty.

The system will purchase short term dated on-chain bonds whitelisted through on chain governance 15 days into maturity until the u(t) reaches 0.8

Borrowing

SabeX needs to generate yields by lending out the deposits that are enough to pay the depositors their interest and fulfill the reserve fund.

The Borrowing Yield that needs to be generated is:

BY= S% . (D + RR . D)

D is the total amount deposited and the RR is the Reserve Rate

The Reserve Rate is a portion of the interest that is set aside to continue providing yields to the depositors during tough market conditions.The RR is initially set to be at 0.01.

Unlike other lending protocols, the borrowing rates vary for every collateral through a mechanism known as the ratio where the ratio is the percentage of TBY to be generated by lending it out against a particular collateral.This Ratio is determined from various factors such as demand for the collateral,quality of the collateral and the maturity date. Therefore the Borrowing Rate for an asset can be determined by:

BY%= (BY . R)/B

Where B is the Total Amount Borrowed and R is The Ratio.

The Borrowers can repay and settle their positions before the maturity date but will have to pay the full interest till the maturity period.

The Collateral can be liquidated as soon as the Collateral falls below the minimum Collateral Factor or if the maturity date has passed.

The Implementation

SabeX uses an implementation similar to the y-token mechanism used by the Yield Protocol. The smart contracts have a 3-month maturity period and automatic rollovers, and users are rewarded for holding their deposits until maturity where the system purchases on-chain bonds which are whitelisted through on chain governance such as those provided by Ondo-Finance until the u(t) reaches 0.8, 15 days into the contract being issued.