Quantillon Labs

MVP Technical Specification

Comprehensive technical specification for Quantillon Protocol MVP implementation on Base mainnet

[This document reflects work in progress. The following content is intended as a reference example and target direction, not as a final or definitive specification]

MVP Technical Documentation

Overview

This document outlines the technical architecture, smart contract specifications, and implementation roadmap for the Quantillon Protocol MVP. The MVP introduces Quantillon's revolutionary three-token ecosystem: QEURO (euro-pegged stablecoin), stQEURO (yield-bearing auto-compounding wrapper), and QTI (governance token with vote-escrow mechanics).

Three-Token MVP Scope: Complete ecosystem implementation with QEURO minting/redemption, stQEURO auto-compounding mechanics, QTI governance foundations, and aQEURO vault with Aave v3 integration on Base mainnet.

🏗️ Global Technical Architecture

Revolutionary Three-Token Ecosystem

Quantillon Protocol operates through a sophisticated three-token architecture designed to create interconnected value flows where each token reinforces the utility and adoption of the others:

Token
Primary Function
Key Innovation
MVP Implementation

💶 QEURO

Euro-pegged stablecoin

Dual-pool architecture with embedded hedging

Full mint/redeem + basic staking

📈 stQEURO

Yield-bearing wrapper

Auto-compounding without token inflation

Complete auto-compounding system

🏛️ QTI

Governance backbone

Vote-escrow mechanics + progressive decentralization

Basic governance + token distribution

Recommended Tech Stack

Component
Technology
Version/Notes

Smart Contracts

Solidity

0.8.x with OpenZeppelin upgradeable proxies

Development Framework

Foundry

For development, testing, and deployment

Blockchain

Base Mainnet

Production deployment (L2 efficiency)

Price Oracles

Chainlink

EUR/USD and USDC/USD price feeds

Yield Integration

Aave v3

USDC collateral deployment on Base

Frontend

React + Next.js

Complete three-token interface

Backend/Infrastructure

Minimal off-chain

Real-time yield calculation and analytics

Core Protocol Architecture

                    ┌─────────────────┐
                    │ Chainlink       │
                    │ Oracles         │
                    │ (EUR/USD,       │
                    │  USDC/USD)      │
                    └──────┬─────┬────┘
                           │     │
            ┌──────────────▼─────▼──────────────┐
            │         QEURO Contract           │
            │      (Euro Stablecoin)           │
            └──────┬───────────────────┬───────┘
                   │                   │
        ┌──────────▼───────────┐   ┌───▼───────────────┐
        │   stQEURO Contract   │   │   VaultEngine     │
        │ (Auto-Compounding)   │   │ (Collateral Mgmt) │
        └──────┬───────────────┘   └───┬───────────────┘
               │                       │
        ┌──────▼───────────┐   ┌───────▼───────────────┐
        │   QTI Contract   │   │   Aave v3 Pool        │
        │ (Governance)     │   │ (Yield Generation)    │
        └──────┬───────────┘   └───────────────────────┘
               │
        ┌──────▼───────────┐
        │  YieldController │
        │ (Distribution)   │
        └──────────────────┘

Ecosystem Flow:
1. Users deposit USDC → Mint QEURO (overcollateralized 101%+)
2. Users stake QEURO → Receive stQEURO (auto-compounding)
3. Collateral deployed to Aave v3 → Generates yield
4. YieldController distributes yield to stQEURO holders
5. QTI holders govern protocol parameters and treasury
6. Hedgers provide EUR/USD hedging (future full implementation)

Component Responsibilities:

  • QEURO Contract: ERC20 stablecoin with mint/redeem logic, collateral ratio enforcement, and hedger integration

  • stQEURO Contract: Yield-bearing wrapper with automatic compounding and instant liquidity

  • QTI Contract: Governance token with vote-escrow mechanics and progressive decentralization

  • VaultEngine: Manages USDC collateral deposits and Aave v3 integration for yield generation

  • YieldController: Distributes yield between stQEURO holders and hedgers using Yield Shift mechanism

  • HedgerPool: Delta-neutral EUR/USD hedging infrastructure (simplified MVP implementation)

📜 Smart Contract Specifications

QEURO (Euro Stablecoin)

Primary Role: Euro-pegged stablecoin with overcollateralized USDC backing and embedded hedging

Core Functions:

interface IQEURO {
    function mint(address to, uint256 usdcAmount) external;
    function redeem(address to, uint256 qeuroAmount) external;
    function stake(uint256 amount) external returns (uint256 stQEURO);
    function collateralRatio() external view returns (uint256);
    function liquidate(address user) external;
    function getEURUSDRate() external view returns (uint256);
}

Implementation Details:

  • Minting: Issues QEURO tokens when protocol collateralization ≥ 101% using real-time EUR/USD rates

  • Redemption: Burns QEURO and releases equivalent USDC from vault (0.1% fee)

  • Staking Integration: Direct staking to stQEURO with automatic yield allocation

  • Oracle Integration: Chainlink EUR/USD and USDC/USD price feeds with fallback mechanisms

  • Fee Structure: 0.1% mint/redeem fees supporting protocol sustainability

stQEURO (Yield-Bearing Euro Token)

Primary Role: Auto-compounding yield-bearing wrapper for QEURO with instant liquidity

Core Functions:

interface IstQEURO {
    function stake(uint256 qeuroAmount) external returns (uint256 stQEURO);
    function unstake(uint256 stQEURO) external returns (uint256 qeuroAmount);
    function getExchangeRate() external view returns (uint256);
    function getTotalYield() external view returns (uint256);
    function compound() external; // Automatic via YieldController
}

Auto-Compounding Mechanism:

  • Value Appreciation: stQEURO token quantity remains constant, but each token increases in QEURO value

  • Exchange Rate Formula: stQEURO Rate = 1 + (Cumulative Yield ÷ Total Days × Days Held)

  • Yield Sources: Aave USDC lending returns (4-12% APY) minus protocol fees and hedging costs

  • Distribution: 87-89% of yield auto-compounded to stQEURO holders

Example Timeline:

  • Day 0: Stake 1,000 QEURO → Receive 1,000 stQEURO (Rate: 1.000)

  • Day 365: Still hold 1,000 stQEURO (Rate: 1.053 with 5.3% APY)

  • Unstaking: 1,000 stQEURO → 1,053 QEURO

QTI (Governance Token)

Primary Role: Protocol governance with vote-escrow mechanics and progressive decentralization

Core Functions:

interface IQTI {
    function lock(uint256 amount, uint256 duration) external returns (uint256 veQTI);
    function vote(uint256 proposalId, bool support, uint256 weight) external;
    function claimRewards() external returns (uint256);
    function createProposal(bytes calldata data) external returns (uint256);
}

Governance Features:

  • Vote-Escrow (veQTI): Lock QTI for voting power and yield sharing

  • Progressive Decentralization: Gradual transition from Labs control to DAO governance

  • Parameter Control: Collateral ratios, yield distribution, fee structures

  • Treasury Management: Protocol revenue allocation and strategic decisions

Token Distribution:

  • 60%: Community (users, liquidity providers, ecosystem growth)

  • 20%: Team (long-term vesting with performance milestones)

  • 20%: Backers/Investors (strategic funding with lock-up periods)

VaultEngine (Enhanced Collateral Management)

Primary Role: Multi-vault collateral management with advanced yield optimization

Core Functions:

interface IVaultEngine {
    function depositCollateral(uint256 amount, uint8 vaultType) external;
    function withdrawCollateral(uint256 amount, uint8 vaultType) external;
    function rebalance(uint8 fromVault, uint8 toVault, uint256 amount) external;
    function getVaultAPY(uint8 vaultType) external view returns (uint256);
    function getTotalTVL() external view returns (uint256);
}

Vault Variants (MVP Foundation):

  • aQEURO: Aave v3 USDC integration (primary MVP implementation)

  • mQEURO: MakerDAO integration (future Phase 2)

  • bQEURO: Real World Assets integration (future Phase 2)

  • eQEURO: ETH-based collateral variant (future Phase 3)

YieldController (Enhanced Distribution)

Primary Role: Sophisticated yield distribution with dynamic optimization

Advanced Yield Distribution Logic:

  1. Calculate gross Aave yield from aUSDC positions

  2. Deduct protocol fees (10% to treasury and development)

  3. Calculate hedging costs (EUR/USD spread ~1% + variable Yield Shift)

  4. Apply dynamic Yield Shift (target 0.5%) for supply/demand balancing

  5. Distribute net yield:

    • stQEURO Holders: 87-89% (auto-compounded)

    • Hedgers: EUR/USD spread + Yield Shift allocation

    • QTI Stakers: Protocol fee sharing based on veQTI weight

interface IYieldController {
    function calculateOptimalDistribution() external view returns (
        uint256 stQEUROYield,
        uint256 hedgerYield,
        uint256 qtiYield
    );
    function executeDistribution() external;
    function updateYieldShift(uint256 newShift) external onlyGovernance;
    function getYieldShift() external view returns (uint256);
}

🔗 External Integrations

Chainlink Price Oracles

Required Price Feeds:

  • EUR/USD: Primary feed for QEURO peg maintenance and hedging calculations

  • USDC/USD: Collateral valuation and protocol health monitoring

  • ETH/USD: Future multi-collateral support and vault variants

Security Measures:

  • Dual Oracle Setup: Primary Chainlink feed with secondary TWAP fallback

  • Circuit Breaker: Automatic protocol pause during price feed failures

  • Anomaly Detection: Price deviation alerts (>2% in 5 minutes) with manual intervention

  • Update Frequency: 12-second maximum latency for price updates

Aave v3 Integration (Enhanced)

Collateral Strategy:

  • Deploy USDC collateral to Aave v3 lending pool on Base

  • Receive aUSDC tokens representing yield-bearing positions

  • Monitor utilization rates and adjust deployment accordingly

Risk Management:

  • Real-time Aave protocol health monitoring

  • Emergency withdrawal procedures for liquidity crises

  • Dynamic rebalancing based on utilization and yield optimization

  • Integration with multiple DeFi protocols for diversification (future phases)

Integration Flow:

  1. User deposits USDC for QEURO minting or stQEURO staking

  2. VaultEngine optimally deploys collateral to Aave v3 pool

  3. Protocol receives aUSDC representing yield-bearing position

  4. YieldController tracks yield generation and executes distribution

  5. Automatic rebalancing handles withdrawals and optimization

💻 Frontend DApp Specification

Three-Token Interface (Complete MVP)

QEURO Panel:

  • Mint Interface: USDC → QEURO conversion with real-time EUR/USD rates

  • Redeem Interface: QEURO → USDC conversion with fee transparency

  • Balance Display: Real-time QEURO balance and USD/EUR equivalent values

  • Transaction History: Complete mint/redeem operation tracking

stQEURO Panel:

  • Stake Interface: QEURO → stQEURO with projected APY calculations

  • Unstake Interface: stQEURO → QEURO with earned yield display

  • Yield Tracking: Real-time APY, total earned, and compounding visualization

  • Performance Analytics: Historical yield performance and projections

QTI Panel:

  • Governance Dashboard: Active proposals, voting history, and participation metrics

  • Lock Interface: QTI → veQTI with duration selection and voting power calculation

  • Rewards Claiming: Protocol fee sharing and governance participation rewards

  • Treasury Overview: Protocol revenue, TVL, and treasury composition

Protocol Dashboard:

  • Three-Token Overview: Complete ecosystem metrics and health indicators

  • Collateral Ratio: Real-time protocol health across all vaults

  • Total Value Locked (TVL): Aggregate statistics across QEURO, stQEURO, and vaults

  • Yield Performance: Current Aave APY, stQEURO returns, and QTI rewards

  • Market Data: EUR/USD rates, trading volumes, and liquidity metrics

Technical Implementation:

interface QuantillonProtocol {
  // QEURO Operations
  mintQEURO: (usdcAmount: BigNumber) => Promise<TransactionResponse>;
  redeemUSDC: (qeuroAmount: BigNumber) => Promise<TransactionResponse>;
  
  // stQEURO Operations
  stakeQEURO: (qeuroAmount: BigNumber) => Promise<TransactionResponse>;
  unstakeQEURO: (stQEUROAmount: BigNumber) => Promise<TransactionResponse>;
  
  // QTI Operations
  lockQTI: (amount: BigNumber, duration: number) => Promise<TransactionResponse>;
  vote: (proposalId: string, support: boolean) => Promise<TransactionResponse>;
  
  // Protocol Data
  getProtocolMetrics: () => Promise<ProtocolMetrics>;
  getUserPortfolio: (address: string) => Promise<UserPortfolio>;
}

🛡️ Security & Testing Strategy

Comprehensive Testing Framework

Unit Tests (Foundry)

  • Three-Token Interactions: Cross-token functionality and value flows

  • Auto-Compounding Logic: stQEURO yield calculation and distribution accuracy

  • Governance Mechanisms: QTI voting, proposals, and parameter changes

  • Collateral Management: Multi-vault operations and rebalancing

  • Oracle Integration: Price feed handling and fallback mechanisms

  • Emergency Procedures: Circuit breakers and protocol pause functionality

Integration Tests

  • End-to-End Workflows: Complete user journeys across all three tokens

  • Aave Integration: Mock yield generation and withdrawal scenarios

  • Oracle Manipulation: Price feed attack simulations and recovery

  • Stress Testing: Mass operations, simultaneous redemptions, and high-load scenarios

  • Multi-Contract Coordination: Complex interactions between all protocol components

Security Testing Scenarios:

contract SecurityTests {
    function testReentrancyProtection() external;
    function testFlashLoanAttacks() external;
    function testGovernanceAttacks() external;
    function testYieldManipulation() external;
    function testCrossTokenExploits() external;
    function testOracleManipulation() external;
}

Advanced Security Measures

Smart Contract Security:

  • Multi-Signature Protection: Critical functions require multiple signatures

  • Time-Locked Operations: Governance proposals have mandatory delay periods

  • Emergency Procedures: Protocol-wide pause capability with rapid response

  • Formal Verification: Mathematical proofs for critical economic mechanisms

  • Bug Bounty Program: Incentivized community security testing (post-MVP)

Operational Security:

  • Progressive Decentralization: Gradual transition from Labs to DAO control

  • Treasury Protection: Multi-signature wallets with geographic distribution

  • Upgrade Safety: Comprehensive testing and community approval for upgrades

  • Incident Response: Detailed emergency procedures and communication protocols

🚀 Deployment & Infrastructure

Multi-Chain Strategy

Primary Deployment:

  • Base Mainnet: Primary deployment for L2 efficiency and ecosystem integration

  • Ethereum Mainnet: Future cross-chain bridge and institutional access

  • Additional L2s: Arbitrum and Optimism expansion (Phase 2)

Environment Configuration:

Development Environment:

  • Local Testing: Anvil (Foundry) with complete three-token simulation

  • Contract Development: Solidity 0.8.x with comprehensive test coverage

  • Integration Testing: Mock oracles, Aave, and cross-contract interactions

Production Environment:

  • Base Mainnet: Complete three-token ecosystem deployment

  • Cross-Chain Infrastructure: Future multi-chain synchronization

  • Monitoring: Real-time protocol health, yield tracking, and governance activity

CI/CD Pipeline (Enhanced)

Automated Deployment:

name: Quantillon Three-Token Protocol Deployment
on:
  push:
    branches: [main, develop]
  
jobs:
  comprehensive-testing:
    runs-on: ubuntu-latest
    steps:
      - name: Three-Token Integration Tests
        run: forge test --match-path "test/integration/*" --gas-report
      
      - name: Cross-Contract Security Analysis
        run: slither . --exclude-dependencies --check-upgradeability
      
      - name: Governance Simulation
        run: forge test --match-path "test/governance/*" --fork-url $BASE_RPC
      
      - name: Deployment with Verification
        run: forge script DeployThreeTokens --broadcast --verify

Gas Optimization Strategies

Multi-Token Efficiency:

  • Batch Operations: Combined mint/stake operations for gas savings

  • Proxy Patterns: Upgradeable contracts minimizing deployment costs

  • Storage Optimization: Packed structs for multi-token user data

  • View Function Optimization: Efficient read operations across tokens

Transaction Cost Management:

  • QEURO Operations: <60,000 gas for mint/redeem

  • stQEURO Operations: <80,000 gas for stake/unstake with compounding

  • QTI Operations: <100,000 gas for voting and governance participation

  • Yield Distribution: Optimized batch processing with automated triggers

📋 MVP Development Roadmap

Phase 1: Core Three-Token Development (Q4 2025)

Smart Contract Implementation:

  • [ ] QEURO ERC20 with mint/redeem and oracle integration

  • [ ] stQEURO auto-compounding wrapper with yield calculation

  • [ ] QTI governance token with vote-escrow mechanics

  • [ ] VaultEngine with Aave v3 integration and multi-vault foundation

  • [ ] YieldController with sophisticated distribution logic

  • [ ] HedgerPool stub for future EUR/USD hedging expansion

Cross-Token Integration:

  • [ ] QEURO ↔ stQEURO seamless staking/unstaking

  • [ ] QTI governance parameter control over yield distribution

  • [ ] Unified fee collection and distribution across three tokens

  • [ ] Cross-contract security and access control implementation

External Integrations:

  • [ ] Chainlink EUR/USD and USDC/USD oracle connections

  • [ ] Aave v3 lending pool integration with yield optimization

  • [ ] Emergency procedures and circuit breaker implementations

  • [ ] Multi-signature governance setup for progressive decentralization

Phase 2: Frontend & User Experience (Q4 2025)

Complete Three-Token Interface:

  • [ ] QEURO mint/redeem interface with real-time EUR/USD rates

  • [ ] stQEURO staking interface with yield visualization and auto-compounding

  • [ ] QTI governance dashboard with proposal creation and voting

  • [ ] Unified protocol dashboard with comprehensive analytics

  • [ ] Wallet integration supporting multi-token operations

Advanced Features:

  • [ ] Mobile-optimized interface for smartphone-native experience

  • [ ] Portfolio tracking across all three tokens with performance analytics

  • [ ] Educational resources and guided onboarding for new users

  • [ ] Advanced trading features and yield optimization recommendations

Phase 3: Security & Compliance (Q1-Q2 2026)

Comprehensive Security Audit:

  • [ ] Multi-contract security audit by leading firms (OpenZeppelin, ConsenSys)

  • [ ] Cross-token attack vector analysis and mitigation

  • [ ] Formal verification of critical economic mechanisms

  • [ ] Bug bounty program with specialized focus on three-token interactions

Regulatory Compliance:

  • [ ] MiCA compliance verification across all three tokens

  • [ ] Legal classification confirmation for QEURO, stQEURO, and QTI

  • [ ] Institutional compliance documentation and procedures

  • [ ] Regulatory reporting framework and transparency measures

Phase 4: Mainnet Launch & Ecosystem Growth (Q3 2026)

Production Deployment:

  • [ ] Complete three-token ecosystem launch on Base mainnet

  • [ ] Initial liquidity provision and market making across all tokens

  • [ ] DeFi protocol integrations supporting all three tokens

  • [ ] Institutional onboarding and custody provider partnerships

Community & Governance:

  • [ ] DAO governance activation with QTI token distribution

  • [ ] Community grant programs and ecosystem development initiatives

  • [ ] Cross-chain expansion planning and implementation

  • [ ] Long-term sustainability and decentralization roadmap

🎯 Success Metrics & KPIs

Three-Token Ecosystem Health

Stability & Security Metrics:

  • QEURO Peg Stability: EUR/QEURO variance <0.5% across all market conditions

  • stQEURO Yield Consistency: <5% monthly deviation from target APY

  • QTI Governance Participation: >15% of circulating supply actively voting

  • Protocol Security: Zero critical vulnerabilities, >99.9% uptime

Growth & Adoption Metrics:

  • Total Value Locked (TVL): €50M across all three tokens within 12 months

  • User Distribution: 15,000 QEURO users, 8,000 stQEURO stakers, 3,000 QTI governors

  • Daily Active Users: 1,000+ daily interactions across ecosystem

  • Cross-Token Utilization: >60% of users holding multiple tokens

Economic Performance:

  • stQEURO APY: Competitive 5-8% yield with consistent compounding

  • Protocol Revenue: €200K+ monthly from fees and yield management

  • QTI Token Value: Sustainable growth through utility and governance demand

  • Yield Distribution Efficiency: >95% accuracy in automated compounding

Technical Performance

System Reliability:

  • Multi-Token Uptime: 99.9% availability across all three contracts

  • Transaction Success Rate: >99% successful operations

  • Oracle Responsiveness: <30 second price update latency

  • Cross-Contract Coordination: Seamless multi-token operations

User Experience:

  • Transaction Costs: <$10 average cost for complex multi-token operations

  • Interface Performance: <3 second load times for dashboard

  • Mobile Optimization: 90%+ mobile user satisfaction score

  • Educational Effectiveness: >80% user onboarding completion rate

🌟 Innovation Highlights

Revolutionary Three-Token Design

Interconnected Value Creation:

  • QEURO: Provides euro exposure with USD liquidity depth

  • stQEURO: Offers set-and-forget euro yield generation with instant liquidity

  • QTI: Enables sophisticated governance and protocol value capture

Technical Innovations:

  • Auto-Compounding Without Inflation: stQEURO increases value without token rebasing

  • Embedded DEX: Native token swapping eliminating external dependencies

  • Yield Shift Mechanism: Dynamic yield distribution balancing supply and demand

  • Progressive Decentralization: Gradual transition from centralized launch to DAO governance

Market Advantages:

  • First Euro DeFi Ecosystem: Complete three-token architecture for European market

  • Institutional Ready: MiCA-compliant design with professional-grade features

  • Capital Efficient: Optimal collateral utilization across multiple DeFi protocols

  • Community Driven: Governance-first approach with sustainable tokenomics

This MVP Technical Documentation serves as the comprehensive blueprint for Quantillon Protocol's revolutionary three-token ecosystem. For questions or technical clarification, please refer to the complete protocol whitepaper or contact the development team.

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