About Valora Protocol
Introduction
The Valora (Decentralized Stablecoin) protocol is a production-ready, over-collateralized, algorithmic stablecoin protocol designed to maintain a soft peg of 1 DSC = 1 USD. The system is inspired by MakerDAO's DAI but built from scratch with modern Solidity practices and comprehensive testing.
Key Characteristics
- 🔒Exogenously collateralized: Backed by external crypto assets (WETH, WBTC)
- 📊200% collateral requirement: Enforced via a 50% liquidation threshold
- 🌐Fully on-chain & permissionless: No governance token, no fees
- 💰Liquidation incentives: 10% bonus for liquidators maintaining system health
System Properties
System Overview
The DSC system allows users to:
Deposit Collateral
Deposit approved collateral tokens (WETH, WBTC)
Mint DSC
Mint DSC stablecoins against your collateral
Maintain Health
Keep a healthy collateralization ratio (≥200%)
Redeem Collateral
Burn DSC tokens to reclaim your collateral
Participate in Liquidations
Help maintain system health and earn a 10% bonus
Health Factor & Liquidations
Health Factor Calculation
The health factor determines the safety of a user's position:
Health Factor Interpretation:
Healthy position, cannot be liquidated
At liquidation threshold, risky position
Unhealthy position, can be liquidated
No debt, perfect health
Liquidation Process
When a position becomes undercollateralized (health factor < 1.0):
Users with health factors below 1.0
Cover some/all of the debt position
Economic incentive to maintain system health
User's health factor increases after liquidation
Protocol health is maintained through liquidations