thej0n 📺🎩🍖🤝 on Farcaster

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https://opensea.io/collection/dev-21

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eggman 🔵 pfp

I must once again ask you all to respect the fact that I built a stablecoin backed by dogecoin, and it's held the peg for 10 months without issue. (this is easily the dumbest, but also the best thing I've built this cycle)

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thej0n 📺🎩🍖🤝 pfp

thej0n 📺🎩🍖🤝

I respect you fren! 👊 But I see a flaw in the logic. I hope I am wrong, but I can’t not say it. Feel free to dm me. I am not trying to be disrespectful in any way!

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eggman 🔵 pfp

Feel free to throw it out, it's getting an audit anyway 😅

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thej0n 📺🎩🍖🤝 pfp

thej0n 📺🎩🍖🤝

👊 again, I respect you a lot! And I admire your skills and “devotion” to solving this. But I am afraid it is mission impossible. Either you have to hold enough USD, (which is very profitable with zero interest, ref. USDT) or you will always have the liquidation risk.. 🤷 you can give it a “margin of safety” but it doesn’t exist. So you are left with either holding much much more collateral, or simply enough USD. Please elaborate how you can avoid this? 365🤝

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eggman 🔵 pfp

Every stablecoin carries this risk :’) even usdc doesn’t have instant liquidity available - treasury bonds for example can’t instantly translate to on-chain backing, especially outside of trading hours. USDO literally won’t let you mint a USD equivalent token unless there’s a significant level of backing in dogecoin available; running up to a 900% backing requirement, meaning it’d survive a sizeable black swan sized nuke while maintaining the peg. Anyone minting or redeeming USDO would then pay a variable fee rate (starting at 0.25%) which is paid out to those who are staked in to the pool, keeping it competitive with other stable yield options (while drawing that yield from real fees).

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thej0n 📺🎩🍖🤝 pfp

thej0n 📺🎩🍖🤝

Ok cool! 900% is along the line I am thinking in necessary. (And still you have a marginal black swan risk 😅) And if you can build a “fund” to create extra yield, and extra security I think you might be on to something. And preferably long term lock ups and staking. The reward system should reflect those willing to lock, and or provide liquidity. (Some people don’t like this. And I don’t like those people 😅) I have been “pondering” this for a long time. And I still struggle with the math (black swan). You cannot avoid it, but you can make it almost “unthinkable”. And if some profits are set aside the whole time, the math gets better! (And better) And if the alternative is holding with no yield. It is a valid case.

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eggman 🔵 pfp

If it helps, I think if there were a single candle retrace on any top 10 crypto of -87% or so, having to hodl for your full value return is probably a given at that stage :’) In the event where this happens, the de-peg is actually graceful; it doesn’t nuke straight to 0, it just matches the dollar value to the remaining collateralisation (so, 87c if 87% backed), along with ramping fees up to 5% to encourage more users to stake in. Every stable has inherent risks - usdo’s risks is more on the staked side than the holder side, which is essentially the inverse of how stables generally work. And that means it’s much harder to grow liquidity for. But it allows for a fully decentralised & transparent stable in return.

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thej0n 📺🎩🍖🤝 pfp

thej0n 📺🎩🍖🤝

Fair enough! But like I said. If you build (slowly along the lline) a fund with weth for instance, to keep over-collateralization to the infinite. It will have a higher value and higher yield than USD eventually 😄 (If ETH doesn’t die on us) Or government bonds.. but hard to keep that decentralized.. so far.. (or forever.. that is what we want to aviod 😂)

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eggman 🔵 pfp

It would, but at that point you’re double-wrapping/converting collateral tokens, which then adds a new source of risk! Or you’re funding it externally, which unfortunately would have sustainability problems 😅

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thej0n 📺🎩🍖🤝 pfp

thej0n 📺🎩🍖🤝

True! But how (other than trading rewards) can it create a better yield than selling and staking usdt for instance? (Or simply a savings account) with 9x collateral? Of course anything is better than no yield. But it has to pay for the black swan risk too. I am fine with no yield in many cases..

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eggman 🔵 pfp

USDO isn’t built for max yield, it prioritizes safety & transparency; for yield, yep, your options are probably best sought elsewhere! Granted however, the only under stables on that particular chain are bridged - so, the choice in r/r is yours 😬

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