EBT: Elastic Backed Ethereum Token

# EBT: Elastic Backed Ethereum Token ElasticBack enables 1:1 token minting backed by deposits while intelligently allowing up to 25% over-minting, maintaining a stable 75-cent backing for every dollar (denominated in ETH). "Over Minting" is only enabled by the protocol itself, meaning it is permissioned. This "over minting" in generall is meant for rewards payout and incentives. The protocol protects from rapid deposit claims by enforcing a 'fee on withdrawl', meaning it takes a calculated average of withdrawl/burn requests from a trailing time period (e.g. the last 14 days) and enforces a 'surcharge' fee for claims exceeding this calculated amount, preventing rapid dumping/burning. ## How ElasticBack Works It accepts deposits in ETH, LSTs (e.g., stETH, rETH), and LRTs (e.g., tokens representing restaked positions), valuing them via oracles to determine collateral worth. Users can mint a new token, called ElasticBack Token (EBT), at a 1:1 ratio based on their deposit value. Importantly, the protocol can mint up to 25% more EBT than the total collateral value when conditions permit, ensuring that each EBT is backed by at least 75 cents of assets. This approach increases capital efficiency while mitigating risk through dynamic adjustments. ### Practical Example: Basic Deposit and Minting Scenario: Alice deposits 10 stETH worth $20,000 Initial Deposit: 10 stETH = $20,000 collateral value 1:1 Minting: Alice receives 20,000 EBT tokens Elastic Capacity: Protocol can mint up to 25% more = 25,000 total EBT Alice's Share: If she takes maximum leverage, she could mint 25,000 EBT against her $20,000 collateral Backing Ratio: $20,000 / 25,000 EBT = $0.80 per EBT (above the 0.75 minimum) ## The Rage Quit Mechanism To maintain protocol health and user confidence, ElasticBack incorporates a "rage quit" option—a controlled exit mechanism. Users can burn their EBT tokens to reclaim collateral, but with a fee based on a trailing average rate calculated over time. This fee adjusts dynamically based on protocol utilization: Normal operation: 1-2% fee Stress conditions: Up to 5% fee After requesting a rage quit, users must wait through a 7-day withdrawal window, which helps prevent bank runs and stabilizes the system. This design ensures that exits are orderly and fair, protecting all participants. Example: Rage Quit Process Scenario: Bob wants to exit his position Position: Bob holds 15,000 EBT backed by 8 rETH ($16,000) Rage Quit Request: Bob burns 15,000 EBT to exit Fee Calculation: Current trailing fee = 2% = $320 Collateral Returned: $16,000 - $320 = $15,680 worth of rETH Waiting Period: 7 days before Bob can claim his 7.855 rETH Net Return: Bob receives ~98% of his original collateral value ### Collateral Management and Risk Mitigation ElasticBack manages collateral transparently, tracking each user's deposits across multiple asset types. When users rage quit, collateral is returned proportionally from their deposited assets. The protocol continuously monitors the backing ratio—the total collateral value divided by the total EBT supply—aiming to keep it at or above 0.75. If the ratio dips too low, over-minting is disabled automatically.