Simple Stablecoin is a simple stablecoin 😆
Seriously, it's a stablecoin that uses Collateralized Debt Positions (CDP) to mint and maintain the peg stability of the stablecoin.
CDPs are essentially similar to a simple lending protocol that allows you to deposit collateral and borrow stablecoins against it. The collateral is over-collateralized to ensure that the stablecoin is always backed by more than 100% of the value of the stablecoin in circulation.
A liquidation threshold of 80% is set to ensure that the collateral is always over-collateralized. If the value of the loan rises above 80% of the value of the stablecoin borrowed, collateral will be liquidated to repay part of the loan to bring health factor back up.
Simple Stablecoin uses Chainlink price feeds to determine the value of the collateral and uses them to stabilize the peg of the stablecoin to USD.