Every stablecoin has the same function but, behind the scenes, they can have many differences.  The most famous mechanism to back a stablecoin is with fiat money, such as USDT or USDC. However, it’s a method that depends on a centralized entity totally vulnerable to risks.

Then came the stablecoins that were backed by cryptocurrencies, commodities, and algorithms. But we all know what happened with UST and aUSD. The first one couldn’t maintain the emission balance between UST and LUNA. The second one had a bug in a liquidity pool pair that let the hacker create 1.28 billion tokens from nothing. Hector Network started TOR in 2022 as an algorithmic stablecoin, too. Now, Hector Network shifted to a crypto-collateralized stablecoin that has a stable mechanism that prevents it from going the same way as other failed stablecoins. Let’s discover more about TOR in this article.

What is TOR?

TOR is a fully collateralized stablecoin that is part of the Hector Network ecosystem. It is backed by DAI and USDC, which maintains its USD peg. The Hector Network Treasury is responsible for storing all the DAI used to mint it.

This stablecoin was created at the beginning of 2022.

How Does The TOR Stablecoin Work?

The goal of creating this stablecoin was the icing on the cake in the Hector Network ecosystem and integrating it into other chains as well as boosting adoption. To mint it, you need to:

  • Connect your wallet to Hector Network. FYI, you need to hold DAI in Fantom’s chain.
  • Pick the “Mint” Section.
  • Swap DAI for TOR.
  • Press “Mint”.

This is the best way to prove that each stablecoin issued was exchanged for 1 DAI sold by someone else.

What is the Stability Mechanism in TOR?

The criteria applied by Hector Network to create this stablecoin is to maintain a standard balance between the liquidity pools (LP) pair tokens. In short, users will be able to:

  • Mint TOR if it represents less than 45% of the Curve LP total supply. This is part of the expansion feature used to monitor the pools. This decreases the % of TOR(in the LP), and the demand for TOR is higher.
  • Redeem TOR if it represents more than 65% of the LP total supply. This is part of the contraction feature. This increases the % of TOR in the LP which makes the demand for TOR lower.

How does the Ecosystem use TOR?

Before creating this stablecoin, the Hector Network developed a decentralized ecosystem that includes:

  • Staking and bonding.
  • Governance.
  • Staking and Farming.
  • HEC, its native token.

With these milestones, users were able to use these features with HEC and other Fantom-compatible tokens and stablecoins like DAI and USDC. However, there was no native Fantom stablecoin to power the ecosystem, and TOR occupies that place. This means that you can use it to:

  • Farm it in different pools to get wFTM rewards.
  • Swap it to get more than 90 tokens.
  • Bridge it between the BNB Chain and Fantom’s blockchain, among others.

Other very interesting features that are coming to the ecosystem are the bridges, Multipay and TaxReport features.

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The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. This article has been sponsored by Hector Network. Copyright Altcoin Buzz Pte Ltd.


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