Stand Cash Stablecoin Not Stable

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Stand Cash

Stand Cash was an algorithmic stablecoin launched in December 2020, which was designed to keep a reserve backing of ethereum that would be increased whenever the price was above $1 USD, and used to stabilize the coin if the balance was below $1. However, the smart contract was designed to award 9% of all the minted Stand Cash to the developer address.

Based on data from Nomics, it appears that the token never held a price around $1 for any significant length of time. According to Nomics, the reported price was extremely high initially and dropped below $1 on January 8th, 2021, then continued to gradually dropped over time. The website of Stand Cash has since gone offline, and the Twitter account no longer exists.

At the moment, there are only a couple of liquid markets for Stand Cash. The price is below $0.10 and volume is highly limited.

This is a global/international case not involving a specific country.

About Stand Cash

"The quest to create a stablecoin that is true to its name led the Stand Cash team to think outside of the box and come up with a protocol that is driven by a simple but reliable system called the Reserve Asset Mechanism. This is a significant improvement from existing protocols and promises to transform the approach to stablecoins. The team is very proud to be pioneering this, and our contributors should consider that we are on the verge of something big."

"Stand Cash is an open-source, permisionless, highly- scalable, decentralized, algorithmic protocol built on Ethereum. The protocol will be one of the first to employ The Reserve Asset mechanism to stabilize a stablecoin." "No token is pre-minted and the minting will be completely through the community in a fairest manner."

"[T]he Reserve Asset Mechanism is structured like a conditioned reflex, such that when the price of SAC is above 1USD, the protocol purchases Eth using 10% of the rebase and stores it in the treasury, and when SAC is below 1USD, the treasury fund is used stabilize the coin at 1USD again. It is a very simple model as stated earlier but its effectiveness is not in question."

"Reserve assets will repurchase SAC appropriately when the SAC price is lower than $1. If the price can be returned to more than $1 every time, it will help form a very solid price support and will continue to strengthen the price consensus between investment institutions and the community, also increasing confidence." "It’s time to join the revolutionary protocol which uses reserve asset mechanism to stabilize its stablecoin."

"The protocol will maintain a 24-hour time base which will weigh the average of the SAC-USD exchange rates as is read from the Uniswap v2 contract and internalize the information for reference by the stabilizing engine. On the one hand, when the market price of SAC is above 1USD, arbitragers have the opportunity to sell SAC and buy back when the price returns to 1USD; on the other hand, when price is below 1USD, they can buy SAC and sell when price goes back to 1USD."

"The simplicity of this model makes it very sustainable and presents a good opportunity for arbitrage. Also, unlike YAM tokens whose high price makes maintenance via treasury assets impossible, the Stand Cash model requires very little reserve assets for sustenance. Therefore, it can run itself independent of the whales. Furthermore, the purchased reserve assets will continue to appreciate and when the market value surpasses that of SAC, it could form a decentralized central bank, as it has become a 1:1 acceptance project. Therefore, the opportunities are enormous."

"At any point in time, Stand cash bond can be bought from the protocol in exchange for Stand Cash. The buying of Stand Cash bond are performed at an algorithmically set price. With a Stand Cash oracle price of USDT whereby P stands for price, Stand Cash bond are sold off at a price of P SAC (effective price being P^2 USDT), giving opportunity to Stand Cash bond holders a premium when redeemed. Purchased Stand Cash bond can be converted to Stand Cash, in as much as the preconditions are met and the Treasury is not empty."

"Stand Cash bond can still be bought even when Stand Cash trades above 1 USDT (P > 1), even though this nets the buyer a loss when redeemed. For example, when 1 SAC = 1.1 USDT, a Stand Cash bond is sold for 1.1 SAS. Since all Stand Cash bond can only be redeemed for 1 Cash, this yields the buyer a net loss. Thus, Stand Cash bond buying are only expected to occur when 1 SAC trades below 1 USDT. Even though Stand Cash bond purchases at a SAC price above 1 USD is allowed in the contract but not available in the Stand Cash frontend in order to avoid confusion to the users."

"Smart [people] get away from @StandCash! 1. [The developer address is] receiving 9% of all mined SAC. 2. [The developer address] is an [externally owned account], so nobody is going to do [liquidity providing]. 3. [There is] no way to change [the developer address] unless deploying a new version of [the Ethereum smart] contracts. The team is either stupid or evil!"

"After listening to the community suggestion, we have decided to make some few changes for the best interest our project."

"1. We commit to burn all the 9% SAC income came from miners claiming reward. We will burn already received 9% of the SAC income and will be burning the rest daily."

"2. 9% SAS will be used for community governance voting in the future, and none of the team's SAS will be sold."

"3. We are developing a smart contract which will enable our reserve asset to automatically repurchase SAC with rebase fund. Only the contract can use the assets of the treasury. When the SAC price is low, the reserve assets will automatically repurchased SAC until the price is back to $1."

"[H]ave a look at @StandCash. [L]ooks kinda ruggy but owner submitted to timelock contract. [A]lready 20mil [in total value locked.]"

"Jan 3, 2021 2021 #newlistings on http://Hotbit.io $SAC @StandCash will be listed on #HOTBIT"

"Thanks a alot @StandCash I received my meme contest reward." "Thanks Stand Cash team[. I got] the reward, [I] believe SAC and SAS will be have good update and make the price comeback[.]"

By January 22nd, 2021, the Stand Cash Shares (SAS) had dropped 55% and "made it to [a] TOP losers" list.

On February 8th, 2021, "Stand Cash $SAC is live and ranked 1687 on Nomics with a price of $0.17259594, volume of $26.08, and market cap of $8,940.0 @StandCash"

By February 13th, 2021, posts on Twitter were "assuming this project is dead".

"Stand Cash price [as of November 4th, 2022] is $0.089979979208 with a 24-hour trading volume of $0.042830470103."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

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The Reality

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• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Stand Cash Stablecoin Not Stable

Date	Event	Description
January 7th, 2021	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $20,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

The total amount recovered is unknown.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

It's unclear what validation or analysis was done on the Stand Cash smart contract to ensure it could even maintain a peg during normal times. The Stand Cash smart contract contained unexpected code to supply 9% of the newly minted stablecoins to the developer wallet, and it doesn't appear that most users were aware of this. There is no indication that the treasury funds were ever used to restore the peg as proposed in the design.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.