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AVAI Token
An fully backed Avalanche-native stablecoin intended to act as a secure and stable asset that can be used to be paired to enhance Decentralized Finance (DeFi) offerings on the Avalanche network.

What is AVAI?

AVAI was chosen as our stablecoin token name as homage to 'Avalanche's DAI', the MakerDAO token. AVAI is an asset that is pegged to the US Dollar; in other words, a coin intended to float as close to $1.00 USD as possible. It will be backed by locking tokens as collateral in a personal Vault in a Orca Bank as well as via other mechanisms described in the technical overview;.
The entire process is decentralized and does not use a middleman such as a financial institution, meaning simply that the user is in full control of their funds at all times.
An Orca Bank is the contract that allows a user to deposit a specific ERC20 as collateral, granting AVAI in return. Using the USDC token as an example, if a user deposits $150 USD worth of collateral funds into a Vault, they will have the ability to borrow up to 100 AVAI, worth $100 USD. This grants them the opportunity to invest a total of $250 USD, while owing a stable $100 USD.
Each ERC20 token will have a dedicated Bank. When a Bank is made, a user can then create a personal Vault(s) within that bank. A Vault is a smart contract that stores a user's collateral for that Bank type.
AVAI Contract: 0x346A59146b9b4a77100D369a3d18E8007A9F46a6

How is AVAI generated/minted?

AVAI is not produced out of thin air - it can only be created as the output when collateral funds are committed to a Vault. This means that unlike many digital and traditional currencies, there is always full backing for every token of AVAI in existence, at all times.
When the collateral itself rises or falls, the total AVAI in circulation matches that flow, So if for example 10% of all AVAI collateral is withdrawn in one transaction, the circulating AVAI that was backed by that same collateral will automatically be burned simultaneously.

How is AVAI burned?

AVAI is only burnt when collateral no longer backs it. This is done when a use re-pays a loan, or a user redeems AVAI for USD using the Exchange mechanism. AVAI is always backed by collateral, either through Vaults or through the Exchange.

What keeps AVAI 'stable'?

AVAI will have multiple mechanisms to ensure stability, most important being the loan functionality itself. As AVAI is pegged to USD via backing of collateral and insurance that it will be backed by >100% of collateral. If on the open market AVAI price lowers below the USD, this incentivizes people to pay back AVAI; thereby burning it, lowering supply, and increasing the AVAI price back to stability. View more under USD Peg in the technical overview.