Is the recent #USDC de-peg still fresh in your mind or do you have a memory of a goldfish? 🐠🐟

Let's take a look at the latest development of #Stablecoins and Floating Value #Stable Assets!

#RAI $RAI 
#reflexerfinance 

#GHO $GHO 
#Aave

#crvUSD $crvUSD 
#CurveFinance 

 https://i.imgur.com/yNhtntn.png

2/ Are Banks our Frens?

The main cause of the $USDC de-peg was that it had reserves tied up in the collapsing Silicon Valley Bank (SVB).

Therefore, reserves stored in a centralized entity are key to the de-peg. 

This is something that needs to be changed.

3/ I am Very Useful!

$USDT is centralized and therefore it could also be prone to a de-peg just like $USDC

So what other "Stablecoins" could work? 

Keep in mind that the majority of utilization of stablecoins are all centralized. https://i.imgur.com/YL98N1Z.png

*Hint Hint* 😉😜😏

Did you check out our #Stablecoins article we wrote a while back on #link3 ? 

You can get it for only 1 USDT and we are the highest collected post so far! 

https://link3.to/hashbrown_research/post/018812efb49e511286f97b2d9692ea8bb02b7b7e66054c44b4dbb3767c02c9e8

#CyberConnect

4/ 📉

Next, let's look at the more decentralized versions of Stablecoins, $DAI. It is not the best, as it de-pegged at a similar rate to $USDC.

This is due to $DAI having its majority of collateral backed by $USDC.

Some stats for #DAI on the day of de-peg https://i.imgur.com/8td4Szu.png

5/Let's Make a New World! 

The upcoming developments for $DAI by @MakerDAO which is known as the "Endgame Era", could possibly shift $DAI to a floating peg stablecoin. 

https://twitter.com/MakerDAO/status/1641106700756213760

6/ Endgame or Start of the Game?

Quoting the #MakerDAO Endgame Documentation 

"$DAI may not remain pegged to the US dollar and may instead either peg to another reference currency, or become free-floating."

#DAI

7/ Work and Work!

However, could floating peg stablecoins work or is it even being utilized? 

Let's have a quick look at the current alternatives for decentralized floating peg stablecoins.

8/ Vitalik's Cup of Tea

$RAI by @reflexerfinance has captured our attention as it is currently solely collateralized by $ETH only, which is a key difference it has with $DAI. 

Even @VitalikButerin wrote about it back in 2022.
https://vitalik.ca/general/2022/05/25/stable.html

9/ Let the Young Ones Rise! 

The value of RAI/USD is determined by supply and demand where the stabilization aspect of it comes from devaluing or revaluing $RAI.

We notice the mechanism used by @reflexerfinance is similar to the one used by the old @MakerDAO !

10/ How does $RAI Work?

The two main parties and key terminology in the Supply-Demand System of @reflexerfinance : 

a. RAI Holders  
b. Safe (a.k.a "Vaults") Users https://i.imgur.com/Ra6KStZ.png

11/ Mechanism is Everything

Let's take a quick look at how the movement of $ETH will affect the system in @reflexerfinance !

$RAI #RAI https://i.imgur.com/yLbW4fG.png

12/ @vitalik.eth is a Hero!

Vitalik Buterin sent 500 Ether to mint RAI and used it to buy USDC during the USDC de-peg!

https://twitter.com/PeckShieldAlert/status/1634487662009786375

13/ Float and Don't Rock the Boat!

@FloatProtocol seems to be inactive recently, but it has similarities with @reflexerfinance which is attempting to change the system by tracking a basket of digital assets, which will not be equivalent to 1 USD.

14/ Auctions are the Best!

Every period (initially 24 hours), the $FLOAT TWAP will be calculated, and if it differs from the Target Price, and there is an expansion/contraction of the FLOAT supply as necessary. https://i.imgur.com/IF1itWl.png

15/ Eyes on the Target! 🎯

The target price is updated before every auction via the monetary policy contract. The target price only changes if market sentiment and "basket" sentiment are in alignment. https://i.imgur.com/XcjbUaR.png

16/ Compare and Contrast!

A comparison of @reflexerfinance and @FloatProtocol! https://i.imgur.com/5Q8CQBn.png

17/ Don't "Ghost" and Throw me a Curveball!

We have previously written on crvUSD by @CurveFinance and GHO by @AaveAave but let's do a quick recap!

twitter.com/Hashbrown_Tech/status/1615608063645618177

18/ @CurveFinance 

The basis of crvUSD is the Lending-Liquidating AMM Algorithm (LLAMMA). 

The concept is based around the conversion between collateral and the Stablecoin (crvUSD).

19/ The Key Takeaways 

It seems that the mechanism is geared towards protecting crvUSD from de-pegging, however, the "buy high" and "sell low" mechanism is something that needs to be noted. https://i.imgur.com/MqoRFTo.png

20/ The Researchers Unite!

It seems that the institutional researchers on @jpm agree with us!

"LLAMMA’s rebalancing method, therefore, could present instances of permanent loss in periods of outsized volatility (by virtue of effectively buying high and selling low)."

Sneaky Sneaky Free Advertisement! 😉😜

@jpm 

https://www.coinbase.com/institutional/research-insights/research/weekly-market-commentary/economic-jitters-a-look-at-crvusd-january-20-2023

21/ The "Ghost" Of @AaveAave 

The $GHO stablecoin seems to be quite similar to the way $DAI works, and the system heavily relies on the $AAVE token. 

$AAVE #AAVE

22/ `AAVE DAO Controls`

- Facilitators; can mint and burn $GHO tokens
- Bucket Capacity; Upward limit of $GHO that a specific Facilitator can mint.

It also seems that users who stake $AAVE in the Safety Module (stkAave) get to mint $GHO at a discounted interest rate!

23/ The Power of $AAVE

Therefore it seems that @AaveAave is motivating users to hold and buy more $AAVE! 

Bullish!

24/ How does $GHO keep its Peg?

To summarize, you can always borrow, repay and liquidate $GHO at 1 USD. @AaveAave will be programmed to always use to price of 1 GHO = $1.

Therefore, arbitrage opportunities is the key factor in keeping the peg. 

https://docs.gho.xyz/concepts/fundamental-concepts/arbitrage

25/ What do the HashBrowns Think?

In terms of Decentralized Stables, we feel that @CurveFinance $crvUSD seems to be the better solution so far. 

This is due to the fact that the algorithm is programmed to keep the peg and does not rely on external users to keep its peg.

26/ 💀💀💀

In periods of high fear in the market, we can see that Crypto Users have learnt their lesson that nothing is really "too big to fail" in Crypto. 

Even with arbitrage opportunities, more users seem to prioritize in "saving" their capital, instead of trying to profit.

27/ 🖥️🖥️🖥️

Therefore, relying on algorithms programmed to prioritize maintaining the peg would likely be a safer alternative, instead of motivating people to try and arbitrage to maintain the peg. 

What do you think?

28/ Other Riskier but Possible Alternatives

@LiquityProtocol which is solely collateralized by $ETH requires borrowers of $LUSD to maintain a minimum of 110%.

However, in periods of significant volatility, there could be significant risks to the protocol.

29/ Centralized Alternatives. 

In terms of Centralized stable, we still think that $USDT by @Tether_to is still king. 

We have mentioned this before but we think that Stablecoins that have been "Battle Tested" is likely to survive.

30/ Keep Peg No Matter What!

With $USDT being one of the first Stablecoins and still keeping its peg and surviving till this date (albeit de-pegging a few times) it seems to be the safest alternative for now. 

😜😜😜 
@paoloardoino 

https://twitter.com/ha28938/status/1524625791056809984

31/ We Understand Your Pain

Decentralized Stablecoins come with their own risk. 

Considering the volatility within the Crypto Space, it is natural that most would still consider Centralized Alternatives to be safer than Decentralized Stablecoins. 

https://twitter.com/stablekwon/status/1506494471873081352?lang=en

Did we managed to pique your interest on Decentralized Floating Value Stable Assets? 

You can view our report here: 
https://hashbrown.info/article?id=52&title=An_Overview_of_Decentralized_Floating_Value_Stable_Assets

1/ Put on My Thinking Cap!

Firstly, let's have a quick recap of the recent de-peg and how it affected Stablecoins.

The recent de-peg on $USDC just around a month ago has led to some inflows to $USDT.

#USDT #USDC

https://twitter.com/ReflexivityRes/status/1643376423393013760