Since DAI is currently being destroyed
Since DAI is currently being destroyed
Does anyone know an unfreezable stablecoin that is the least at risk of becomming another TerraLuna? I love Monero but its too volatile to keep 100% of my life savings in an unfreezable stablecoin is CRUCIAL. This is such horrible news. Fuck Rune Christiansen for this shit!!
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It really is a shame what's happening with dai, isn't it. They're trying to cut out the decentralized thing from MakerDAO without alienating the community by creating another thing with the decentralized characteristics that they will design to fail. It's such a terrible thing happening.
Thankfully, the makerDAO multicollateral contracts are available, anyone can launch a clone of DAI that functions as is. And they can even prevent things like USDC collateral (the only time they've ever broken peg was due to USDC losing it's peg, DAI is very well designed and IMO can handle decentralized collateral volatility) and keep it strictly ETH or whatever. Also, am interesting thing, the oracle can be trivially modified to provide a price of another asset, so you can synthetically create gold backed stables that hold no real gold if you like, or even more interesting, you can peg to things even more stable than gold and that track inflation, like salt, or peg to non asset measures like CPI if you like. You just have to remember that this is potentially manipulatable by participants in those measures, just like the value of DAI is subject to Fed policy. Personally, I'd rather have my stable pegged to a commodity like salt than to a fiat currency.
If you like the idea of gold, there's PAXG, I don't know if it's freezable, I would be surprised if it isn't, but I highly doubt these other stables are going to start freezing out small fish just to demand KYC.
Anyway, this is all off topic for Monero but it's still something I figured is worth discussing. On a Monero related topic, o wonder what the serai developers are going to do in response to this, their entire goal is a dex that supports DAI, ETH, BTC and XMR from launch as basic functionality.
Edit: apparently, there's liquity and lusd, which is governance free, unfreezable, pegged to USD via ETH collateral (unlike Luna which existed to collateralize TUSD, an obvious fail to anyone who even marginally understands this stuff) and has what I think is a pretty solid peg mechanism from my perusal of documentation. I'll have to look at details and think on it, my main concerns are that the collateralization ratio is hard coded into the contracts at 110% (no governance, remember) and that the base fee for creating LUSD is hard coded to stay between 0.5% and 5%, which may not be sufficient in wild swings in the value of ETH. The contracts are not upgradeable, again, no governance. That's good but also scary. All in all, if I were going to park some capital in a USD pegged stable some time over the next year or two, I wouldn't use it, I want to see how it performs in a bear first, and DAI is going to work as is for the next couple of years anyway so it works fine for now.
as someone who has studied both, I would recommend LUSD (v1) over dai. LUSD was launched 3 years ago, so it stood the bear test. the minimum collateralization ratio of 110% applies to individual troves as long as the total system collateralization is over 150%. once that's breached, troves are required to have 150% minimum. the Achilles heel is the oracle. if Chainlink pulls the rug, which they can, it's over (sadly, Tellor is used by Liquity in a way that it can't protect against a Chainlink apocalypse). Maker is somewhat better in this because they use Chronicle, which is ran by more trustworthy people, but I'm almost sure they haven't made their contracts immutable. if that is the case, then the same attack vector exists there.
as you'll see, neither of these are the solution we're looking for, and they both run on the no-privacy, hypercomplex, captured, constantly changing Ethereum blockchain, so... fuck.
but dai for a long time has not been what the market thinks it is. avoid it.
Interesting, I had learned about the recovery mode of Liquity and knew about the 150% system wide collateralization threshold, also the redemption mechanism to liquidate troves even if they're above the threshold as a stabilizing mechanism. It looks like a good set of mechanisms that is capable of maintaining a peg. I didn't know it had been running for 3 years, I'll have a look at price history to see if the peg has ever broken and see what happens to cause it to recover. I was under the impression that the oracle signal was on chain, from liquidity pools against other stables. All in all, in my mind, ability to hold a peg is less important than the feedback loops being in place to allow it to recover on it's own. It looks like liquity has those, unless im missing a glaring hole which I guess I'll find out in due time.
I knew Maker was not immutable yet, and I was eagerly awaiting the promised day when that would be rectified, this news of splitting maker out into a compliant, custodian asset collateralized system and a "pure decentralized" one tells me that basically that is never going to happen. I'll observe puredai. I have no interest in the other one.
All this stuff being on Ethereum is a bit of a minus for me too at this point. It works, I'm alright with it the way I'm alright with Bitcoin, but it isn't ideal.
see what happens to cause it to recover.
this should set you up as a starter: https://www.liquity.org/blog/on-price-stability-of-liquity
I was under the impression that the oracle signal was on chain, from liquidity pools against other stables
that would mean that if even one of those stables dies, LUSD would destabilize too (and there would be no possibility of intervention, since that protocol is completely ossified). that's worse overall.
Maker was not immutable yet
I was talking about Chronicle, the oracle protocol that spun off from Maker.
basically that is never going to happen.
look at Maker's history, what's been promised, and what's been delivered. don't take it for granted that puredai will ever happen.
Tether also has gold backed XAUt token. I believe with the big narrative of RWA we will see more stables.
What does RWA solve? It has no real connection to the blockchain besides a promise from a centralized entity that it is backed. Almost no difference to digital fiat unless it is unfreezable?
I was looking into xaut and from what I understand you have to KYC to get it and they freeze it.