Peg Stability

ENNI stablecoins use three layers of peg defense. All of them are automatic and require no governance action.

1. Direct Swap Floor and Ceiling

Direct Swap creates hard bounds on the price.

Ceiling ($1.00 / 1.00 CHF). If enUSD trades above $1 on a DEX, anyone can mint enUSD from USDC at 1:1 and sell it for a profit. Same logic applies to enCHF with ZCHF. This caps the upside.

Floor (~$0.995 / ~0.995 CHF). If enUSD trades below $0.995, anyone can buy it cheap on a DEX and redeem through Direct Swap for $0.995 worth of USDC. The 0.5% fee sets the floor slightly below $1. Same applies to enCHF.

This arbitrage is permissionless and instant. No one needs to coordinate it.

2. Buyout Arbitrage

When a stablecoin trades below peg, the buyout system creates additional buy pressure.

Arbitrageurs buy the discounted stablecoin on a DEX and use it to buy out a borrower’s WETH collateral at oracle price through the CDP. They pay a 4–9% premium to the borrower, but the discount from buying below peg makes the trade profitable.

The worse the depeg, the more profitable the arbitrage, the stronger the buy pressure. This is self-correcting.

3. Liquidation

Positions that reach 88% LTV are liquidated. Liquidators need stablecoins to execute liquidations, which creates buy demand during stress periods. The debt they repay is burned, reducing supply.

During a Depeg

All three layers compound. If enUSD drops to $0.97:

  • Direct Swap redeemers buy at $0.97, redeem at $0.995. Profit.
  • Buyout arbs buy at $0.97, buyout collateral at $1.00 oracle price. Profit.
  • Borrowers buy at $0.97 to repay $1.00 face value debt. Profit.
  • Supply shrinks from burns on every repayment and redemption.

Every participant profits from fixing the depeg. The protocol doesn’t need to do anything.

enUSD vs enCHF Peg Differences

enUSD has a stronger hard floor because USDC and USDT are deep, liquid markets. Direct Swap redemption is always available as long as there are reserves.

enCHF relies more on buyout arbitrage for peg recovery since ZCHF (Frankencoin) has less on-chain liquidity than USDC/USDT. The 0.5% redemption fee on enCHF is burned rather than donated, creating stronger deflationary pressure to compensate.

Stablecoins Borrow