Mechanism
How the Initial Stablecoin Offering works
The ISO Mechanism Explained
The Initial Stablecoin Offering (ISO) is a novel fundraising mechanism that leverages the stability of stablecoins and the yield-generating potential of reserve assets to create a sustainable funding model for projects.
The ISO mechanism creates a win-win situation where participants hold a stable asset with no downside risk, while the project receives sustainable funding through yield generation.
Core Components
SAGEUSD
A regulated USD-backed stablecoin with 1:1 backing
Reserve Management
Professional management of USD reserves to generate yield
Points Program
Rewards for SAGEUSD holders that convert to $SAGE tokens
Yield Allocation
Allocation of generated yield to fund development
Regulatory Compliance
Operation within regulatory frameworks
Redemption Mechanism
Ability for holders to redeem/trade SAGEUSD at any time
The ISO Flow
Stablecoin Creation
SAGEUSD is created as an ERC-20 token on Ethereum, with each token backed 1:1 by USD held in reserve.
1 SAGEUSD = 1 USD in reserve
User Acquisition
Users acquire SAGEUSD through various channels:
- Crypto on-ramps like Moonpay
- Converting other cryptocurrencies like USDC or ETH via Uniswap
- Direct purchase through partner platforms
Reserve Management
The USD reserves backing SAGEUSD are managed by professional financial experts to generate yield through:
- US Treasury bills
- Money market funds
- Other secure, regulated financial instruments
Yield Generation
The managed reserves generate yield, which is collected by the SAGE treasury.
Example: 1B USD in reserves at 3% APY = $30M annual yield
Development Funding
The generated yield is used to fund the development of the SAGE ecosystem, including:
- R&D
- Team expansion
- Marketing and community building
- Legal and regulatory compliance
Reserve Management
The management of USD reserves is a critical component of the ISO mechanism:
The reserves are allocated to various yield-generating instruments to maximize returns while maintaining security and regulatory compliance:
This allocation is designed to balance yield generation with liquidity needs and risk management.
The split amongst various instruments is subject to change based on market conditions and regulatory requirements.
The reserves are allocated to various yield-generating instruments to maximize returns while maintaining security and regulatory compliance:
This allocation is designed to balance yield generation with liquidity needs and risk management.
The split amongst various instruments is subject to change based on market conditions and regulatory requirements.
The reserve management strategy includes robust risk management practices:
- Diversification across multiple instruments and institutions
- Regular risk assessments and stress testing
- Conservative allocation to prioritize capital preservation
- Maintaining adequate liquidity for redemption requests
- Regular audits by reputable third-party firms
These practices ensure the security and stability of the reserves backing SAGEUSD.
The reserve management operates within regulatory frameworks to ensure compliance:
- Partnering with regulated financial institutions
- Regular reporting to relevant regulatory authorities
- Adherence to applicable financial regulations
- Transparent disclosure of reserve composition and management
- Implementation of robust AML/KYC procedures
This regulatory approach provides confidence to users and authorities alike.
Yield Allocation
The yield generated from the reserves is allocated to various aspects of the SAGE ecosystem:
Scaling the ISO
As the SAGEUSD market cap grows, the ISO mechanism becomes increasingly powerful:
ISO Scaling Example
This scaling mechanism creates a virtuous cycle: as more users adopt SAGEUSD, more funding becomes available for development, which enhances the SAGE ecosystem, attracting more users, and so on.
Ready to learn more about the benefits of the ISO? Check out ISO benefits documentation.