SatoshiStable Protocol Documentation

Overview

SatoshiStable is a decentralized finance protocol enabling Bitcoin holders to mint BUSD - a USD-pegged stablecoin - while maintaining custody of their BTC. Built on Stacks Layer 2, it combines Bitcoin's security with advanced DeFi capabilities through an over-collateralized debt position model.

Key Features

• BTC-Backed Stablecoins: Mint BUSD using Bitcoin-denominated collateral
• Autonomous Monetary Policy:
  • 150% minimum collateral ratio
  • 130% liquidation threshold with 10% penalty
  • 1% annual stability fee
• Non-Custodial Vaults: Users retain control of collateral
• Decentralized Governance: BST token holders govern protocol parameters
• Stacks L2 Integration: Bitcoin-secured smart contracts with fast transactions

Technical Specifications

System Constants

Parameter	Value	Description
MIN-COLLATERAL-RATIO	150%	Minimum collateralization ratio
LIQUIDATION-THRESHOLD	130%	Collateral ratio triggering liquidation
LIQUIDATION_PENALTY	10%	Penalty applied during liquidation
STABILITY_FEE	1%	Annual fee on outstanding debt
MINIMUM_COLLATERAL	0.1 BTC	Minimum vault collateral amount
MINIMUM_DEBT	100 BUSD	Minimum debt issuance

Core Components

1. Vault Management System

   • Collateralization ratio calculations
   • Debt accrual with stability fees
   • Automated liquidation mechanisms

2. Price Oracle System

   • Decentralized BTC/USD feed
   • 1-hour price freshness requirement

3. Token System

   • BUSD (Stablecoin)
   • BST (Governance Token)

Smart Contract Functions

Governance Functions

Function	Description	Access Control
initialize	Initializes protocol parameters	Contract deployer
set-oracle	Updates price oracle address	Contract owner
set-fee-collector	Changes fee recipient	Contract owner
pause-protocol	Emergency system pause	Contract owner
resume-protocol	Resume normal operations	Contract owner

Oracle Functions

Function	Description
update-price	Oracle updates BTC/USD price (micro USD)

Vault Operations

Function	Parameters	Description
deposit-collateral-and-borrow	(collateral-amount, busd-to-mint)	Create/adjust vault + mint BUSD
repay-and-withdraw	(busd-to-repay, collateral-to-withdraw)	Reduce debt + reclaim collateral
liquidate	(vault-owner, busd-amount)	Liquidate undercollateralized vault

Token Operations

BUSD Stablecoin

• transfer-busd: Transfer BUSD between accounts
• get-balance-busd: Check user balance
• get-total-supply-busd: Total BUSD minted

BST Governance Token

• transfer-bst: Transfer BST tokens
• mint-bst: Create new governance tokens (owner only)

Risk Parameters

;; Collateral Calculation Example
Collateral Ratio = (Collateral in BTC * BTC Price) / (Debt in BUSD) * 100

;; Liquidation Process
Liquidator receives: (Debt Repaid * (BTC Price^-1)) * 110%
Protocol collects: 10% penalty in BTC

Error Codes

Code	Error	Description
100	ERR-NOT-AUTHORIZED	Unauthorized access attempt
101	ERR-INSUFFICIENT-COLLATERAL	Below minimum collateral ratio
102	ERR-VAULT-NOT-FOUND	Specified vault does not exist
103	ERR-PRICE-OUTDATED	Stale price data (>1 hour old)
104	ERR-BELOW-MINIMUM	Operation below minimum threshold
105	ERR-NOT-LIQUIDATABLE	Vault not eligible for liquidation

Security Model

1. Collateral Safeguards

   • Over-collateralization requirement
   • Minimum vault size (0.1 BTC)
   • Time-weighted stability fees

2. Price Feed Protections

   • Oracle authentication
   • Price freshness checks
   • Decentralized oracle support

3. System Controls

   • Emergency pause functionality
   • Governance-controlled parameters
   • Non-custodial asset management

Usage Examples

Creating a Vault

;; Deposit 0.5 BTC and mint 20,000 BUSD
(contract-call? .satoshistable deposit-collateral-and-borrow u500000000 u20000000)

Repaying Debt

;; Repay 5,000 BUSD and withdraw 0.1 BTC
(contract-call? .satoshistable repay-and-withdraw u5000000 u100000000)

Liquidating a Vault

;; Liquidate 10,000 BUSD of undercollateralized debt
(contract-call? .satoshistable liquidate 'vault-owner u10000000)

Governance Framework

BST token holders can:

• Adjust fee structures
• Modify collateral ratios
• Upgrade system parameters
• Manage oracle integrations

Governance proposals require BST staking and majority approval through on-chain voting.

Audit Considerations

1. Oracle reliability mechanisms
2. Interest accrual precision
3. Liquidation incentive alignment
4. Edge case handling for:
   • Price volatility scenarios
   • Simultaneous transactions
   • Network congestion events