#Essence Finance #SCR

On October 26, according to market information, the decentralized stablecoin project Essence Finance in the Scroll ecosystem experienced a RUG, with its USD-pegged stablecoin CHI dropping 94.78%, now quoted at 0.05153 USDC. Over 20 million dollars in collateral is suspected to have been withdrawn, and the project's last tweet was posted on September 11.

Essence Finance aims to realize the vision of issuing highly scalable and truly decentralized stablecoins.

Essence Finance is paving a new paradigm for decentralized finance, focusing on providing users with a stable, decentralized method of value storage and transfer, while not sacrificing the core principles of decentralization and security.

Tokens

The Essence ecosystem adopts a dual-token model, including:

CHI: A fully collateralized, scalable, decentralized stablecoin pegged to the US dollar.

ZEN: A dual utility token, serving as a governance token and beneficiary of protocol growth.

Protocol Controlled Value (PCV)

Many DeFi protocols heavily rely on incentivized liquidity, offering high rewards and incentives. However, in the long run, this approach is unsustainable, as liquidity providers will only remain loyal if the rewards are effective. Consequently, capital may vanish quickly, which is often detrimental to the long-term success of the protocol.

By providing our own liquidity instead of relying on external sources, Essence avoids the profit-driven liquidity trap. This brings stability and long-term liquidity to the Essence ecosystem, ensuring the protocol's long-term stability and sustainability. In short, PCV allows Essence to provide a reliable source of liquidity aligned with the protocol's goals and purposes, rather than being subject to the whims of external liquidity providers.

Direct Redeemability

All CHI can be directly redeemed for PCV reserves. This is key to allowing CHI to scale effectively while maintaining decentralization. If the stablecoin can always be bought at a price of 1 dollar and sold at 1 dollar, then it can scale to any supply and meet the growing demands of the DeFi ecosystem. In contrast to centralized alternatives like USDC or USDT, transparent on-chain redemptions provide a critical value enhancement that helps maintain the stability of the Essence ecosystem, as users can have confidence in the potential value of CHI.