Angle is an over-collateralized, decentralized and capital-efficient stablecoin protocol. Thanks to the liquidity providers it uses, the protocol proposes full convertibility between stable assets and collateral, meaning that it is possible to swap collateral against stable assets, and stable assets against collateral at oracle value. This makes the protocol not only capital efficient but also highly liquid. Angle Protocol could be used to issue any stablecoin, and will start at launch on mainnet with a stable Euro called $agEUR. Besides creating the liquid agEUR stablecoin, the goal of Angle is to create stablecoins for almost all Forex currencies, including the US Dollar.

Authors: Christian Viehof, Maximilan Bruckner

Protocol design of Angle

The protocol involves 3 agents, which all benefit from the protocol, while bringing something to it:

  • Stable Seekers: they swap collateral against stable assets, and conversely swap stable assets against a whitelisted collateral of their choice at oracle value, with no slippage and small transaction fees.
  • Hedging Agents (HAs): they open on-chain leveraged positions on Angle. They need to bring accepted collateral to the protocol, and are able to take positions on perpetual futures on the available collateral/stablecoins pairs. By doing so, they insure the protocol against the volatility of the collateral brought by stable seekers. This volatility is transferred to these traders, and the protocol is able to ensure users of the convertibility of the stablecoins they own even in case of collateral price drops.
  • Standard Liquidity Providers (SLP): they lend collateral to the protocol in return of a share of minting and burning fees, and of the rewards earned from investing part of the protocol reserves into yield-earning strategies.

To sum things up, Angle matches people who seek stability and people who want volatility (HAs). However, there isn’t always a perfect match between supply and demand of volatility, meaning that the protocol’s collateral may not be fully covered at all times by Hedging Agents. The additional collateral brought by Standard Liquidity Providers, serves as a buffer in the protocol.

Figure 1: Angle protocol stakeholders (Source: https://docs.angle.money/concepts/overview)

How to deal with multiple stable assets?

Angle’s design can be used to issue multiple stablecoins, provided that there is an oracle feed for each of them. The protocol has started with the agEUR (Euro stablecoin), and the idea is to follow with stablecoins pegged to other currencies like the British pound or the Swiss franc.

The concept of the protocol is that each stablecoin is independent from other stablecoins, meaning that the collateral pools are separated in all cases. Being a Hedging Agent for the collateral DAI used to back Angle’s agEUR implies nothing about being a Hedging Agent on the pool DAI/agCHF. The same goes for standard liquidity providers. You can be a standard liquidity provider for just the agEUR stablecoin, but not for the agCHF stablecoin.

Figure 2: agEUR market share (Source: https://dune.xyz/SebVentures/Angle-Dashboard)

Angle relies on full convertibility of collateral and stable assets, meaning users can swap collateral against stablecoins as well as stablecoins against collateral at any time.

To generate a stable asset, a user just has to send to the protocol a whitelisted collateral. An oracle then determines how many stablecoins need to be minted and sent to the user. Like in an AMM swap, the collateral received by the protocol does no longer belong to the user.

The same procedure works when users are willing to cash out. They just have to send their stablecoins to the protocol and specify the collateral they want in exchange. In return, they get the chosen collateral in an amount depending on the collateral price specified by the oracle and on the transaction fees. The stablecoins received by the protocol are then burnt.

Figure 3: Tokenbase list with ANGLE and agEUR (Source: https://bit.ly/3xnlH2k)

The classification of Angle according to the ITC

The ANGLE token is the primary token for the Uniswap decentralized exchange and plays a vital role due to the fact that it offers holders an on-chain governance functionality so that they can participate in the decision-making process on how the platform is managed and developed in the future.

Figure 4: The ANGLE Tokenbase entry (Source: https://itin.itsa.global/785KPBWW8)

Economic Purpose (EEP): Angle is listed as a Governance Token (EEP22TU03) due to its governance functionality.

Industry Type (EIN): The issuer of Angle is active in the field of Decentralized Exchanges, Markets and Market Making (EIN06DF01).

Technological Setup (TTS): Angle is an Ethereum ERC-20 Standard Token (TTS41BC). The Class “Ethereum ERC-20 Standard Token” captures every Token that is implemented by means of the ERC-20 Standard on top of the Ethereum blockchain.

Legal Clam (LLC): Angle does not entitle its holder to any legal claim or rights against the issuing organization, therefore it is listed as a No-Claim Token (LLC31).

Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. Angle’s platform is built by a team of programmers and engineers that make up the core contributor community. It’s Issuer Type is a Private Sector Legal Entity (LIT61PV).

Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information of the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). Angle qualifies as an Utility Token (REU52) according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

Remarks

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Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via christian.viehof@itsa.global and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.

Maximilian Bruckner is Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He has a strong international background with significant time spent in Spain, South Africa, and Canada. Currently pursuing studies at the Frankfurt School of Finance and Management, you can contact him via maximilian.bruckner@itsa.global and connect on LinkedIn if you would like to further discuss ITSA e.V. or have any other open questions.

The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.