gm I’d like to table for consideration the possibility of Jet creating a collateralised stablecoin, akin to Maker’s DAI.
Not sure if anyone is familiar with Venus from the Binance Smart Chain.
They attempted to blend a “Compound” fork with a “MakerDAO” fork.
Being owned by Swipe, which was bought by Binance, they had something of a leg-up in the BSC ecosystem. But I’m not sure how deeply they understood how Maker works, as they have struggled to keep their stablecoin VAI near $1, although it’s close right now.
Despite this, it did actually seem to make sense to have a collateralised stablecoin as part of the protocol.
I note that Solana still doesn’t have much of a “DAI” replacement. USDC seems to be the order of the day, and I’d love for a reliable stablecoin that was more akin to the offerings from Maker.
It may be simply be dividing the team’s finite attention up too far, or even perhaps a stablecoin is already on the cards… idk.
I note PAI is already a thing but I’m not convinced the team behind it is the right team to grow it as far as it needs to go. So I consider the “collateralised stablecoin” space wide open right now on Solana.
Hi. One of the governance delegates from Maker, and what passes for a monetary economist over there.
I do want to caution, though, that it’s a huge time and bandwidth sink, and it’s not always obvious how to monetize and design a stablecoin. That being said, Jet has a few advantages:
Of the major stablecoins, only USDC is making multiple chains a high priority. Maker is working on chains one by one, but it is likely a year or more (if ever) that DAI can actually be generated outside of Ethereum. You’ll note that Tether and BUSD are not migrating much, so it’s mostly USDC and DAI now.
Being native and first mover on a chain may allow for a defensible market share.
Seeing the regulatory and economic challenges of the existing top stablecoins, Jet would have the benefit of designing around many of the challenges of today. No one knows what the challenges of tomorrow will be, though.
If successful, a stablecoin wedded to a lending protocol would provide some significant synergies.
So… Jet had a good chance at it. But the real question is if the juice is worth the squeeze.
Why is monetizing a stable coin hard? I haven’t thought about it too much but it seems like there are plenty of ways for value to accrue to the treasury if desired. You can take a fee every time someone mints/burns, take a fee on liquidations, etc.
If Jet goes the stablecoin route, I think it should not allow USDC as collateral and instead attempt aggressively tight overcollateralization of decentralized assets (say <110% SOL collateralization for example).
USDC is so integrated in the Solana ecosystem that the most/only realistic scenario where a decentralized stablecoin grows is that regulators crush centralized ones - for example if they refuse to accept a centralized stablecoin that doesn’t kyc all users. In this scenario it’s much better for the stablecoin to not be backed by USDC.
My two cents: the Parrot team is capable. PAI is a well-designed stablecoin. Parrot hasbeen backed by great venture capitalists.
They have been “too successful” with their IDO, what created enormous expectations. Let’s set aside the FUD and integrate / synergize with them instead of creating yet another stablecoin. UXD is also in the making, by the way.
I was thinking instead of a stablecoin, of which there are many, perhaps many better positioned than us, we could attempt to provide a flatcoin. Or, at the very least, a ‘basket’ currency similar to Balancer.
Briefly describing the two, a flatcoin serves a similar role to the stablecoin, however the goal is not to be pegged 1-to-1 to a fiat currency. The goal instead is price ‘flatness’, a consistent non-volatile exchange rate. The engineering path forward on this is not quite so obvious, but the rewards are clear. We would be providing a service that other platforms do not, and perhaps could capture a network effect that would mean they could not.
The ‘basket’ currency would instead serve as an index on the currencies held in the jet pool, as opposed to acting as an asset that resists volatility itself. Pricing action similar to an AMM, the difference being the members of the curve would be more than two tokens. This would offer a way to de-risk out of a particular coin and earn yield on it at the same time. It may even be possible to allow different compositions of underlying pools, and get exposure to several different tokens for the same initial deposit. For example, say someone was very bullish on BTC and SOL, and did not know which of the two would hit a breakout pricing first. They could deposit their wBTC, and mint a token that is pegged to the movement of both BTC and SOL and derisk from volatility in that pair.