Innovative Approaches to Enhancing Peg Stability in Decentralized Stablecoins

[Music] this is the stable coin taxability mechanism Workshop I'm really excited to be talking about the different stability mechanisms out there and how they impact defy and Beyond um we're joined by a great group of Palace today maybe we can uh start off with just a quick introduction somebody Mike yeah yeah let me start I'm Mike I'm from tsunami protocol and uh protocol is decentralized protocol which create a yield generation stable coins uh whose collateral is uh utilized by our omnipol and distributed through different profit generation strategies so and I want to talk about our solution today it's it was inspired by frax algorithmic market operation controller and we create our own but I will tell later I am from Silo Finance we have isolated the money markets uh yeah I'm happy to be here hey everyone this is Larry the Cucumber I do developer relations at Reserve protocol um formerly founder of pickle finance and Reserve is a project a D5 protocol which has provides uh smart contract factories for anyone to develop their own asset-backed currencies it could be stable coins it could be you know volatile uh crypto indexes whatever and you know hopefully share a bit more about how we approach stable coins hey everyone thanks a lot for having us I'm Uber from stackdown um so stick though to put it in a nutshell it's a governance governance token liquid is taking uh protocol so we have a lot of liquidity questions when it comes to maintaining the liquidity of those uh of those lsds right and um and we also have several liquidity maintenance tools such as wood Market um or even like boosted liquidity providing Solutions so yes very happy to talk about liquidity and stability right great uh and I'm Paul I'm the protocol lead at Gauntlet um so Gauntlet is a financial modeling platform that serves D5 protocols um we started off as a research shop um so our original work was around I'm writing a lot of research on l1's um stability mechanisms risk management Etc and we have then productized that into a platform that serves D5 protocols primarily we do risk management protocol optimization mechanism design and treasury management so on the stablecoin front we have our clients um in now and in the past in terms of our research work have included a liquidy and maker um so yeah excited to kick off this conversation um you know there's obviously a ton of different stability Peg mechanisms out there in your mind um what are some of like you know the high level mechanisms and what are their respective advantages and disadvantages we can start off with microphone tsunami [Music] so you have better answer I mean for the population of people because it was in research I'm sorry no no I mean I can introduce our own oh yeah and maybe guys yeah yeah that sounds good yeah okay so in tsunami uh we started with on omnipuls when our user deposit the Stables to omnipool and then it distributes to a different profit strategies and these omnipuls users receive LP tokens which increase in the price when we have to compound the revenue from the strategies it was our base then we understand that we can create Stables based on such omniples as collateral so collateral when the LP price go up the very base our stable coins and then we understand we see how the defy evolving and we see how frax is making the back mechanism I'm talking about algorithmic Market operation control which deflate and inflate the amount of token in trading posts and we have this like you know inspiration and what our interest in idea we use our own nipple to provide this we name it automated Opex stabilizator so we have omnipuls it's provide Revenue our stables and we deploy uh another version of our omnipot which uh make this stabilization and how it works uh we put the liquidity like stake in liquidity of our stables in this omnipot and then it inflate and deflate the amount of our Stables inside curve or another trading pool so we uh like our own LPS and for example if this insufficiency in curve pool of our token we can withdraw usdc deposit to our main omnipot generate our stables and put it back and the amount can go and forward and backward and it's the my basic idea that Revenue generation and distability makes the same technology which proof and battle and this Audits and its works yeah um yeah um but I guess the broader question was yeah yeah so you know the three main categories of uh you know what what determined Peg are you know you know broadly Fiat collateralized stable coins crypto collateral stable coins um you know CDP type models uh liquidy maker or algorithmic um stable coins which we will not speak of um for the most part I think because those are you know they come with too many risks not not kind of in Vogue now maybe maybe the next bear market and next bull market but uh what it sounds like you know with Praxis solution or you know how you've evolved off frax is um you know fractionally collateralized uh mostly Fiat um well all Fiat and as as it earns yield uh it will um mint more to you know out of the generated yield um such that the the net asset value of of one UCD is is one dollar that that's that's my understanding okay um so yeah so there's you know now a couple more flavors of sort of that simple distinction um Fiat stable coins traditionally you know being just usdt usdc uh but now you know it comes with more variety um you know you'd be able to speak best to the the crypto asset backed ones where um you know CDP type models um yeah you wanna yeah sure absolutely yeah I think uh uh the best uh like uh flavor of stable cones right now they're the one like uh uh ave's uh recent uh go is uh and of course makers and uh is and and even style of Finance we have um a stable coin and a kind of a smaller scale is is basically CDP type some of them they usually have a PSM model where that kind of stabilizes uh could always redeem to kind of stabilize the uh the mechanism uh civilization mechanism basically but the CDP model is basically the deposit uh well uh to deposit a stable coin as deposit a crypto asset and then you could mint um uh this stable stable coin uh and that's uh that's one of the one one of those uh the the disadvantage of that at least with we've seen it with a die the first version was basically not very stable so they introduced the BSM model and that kind of kind of stabilized that uh but also the other factors that helped die kind of stabilize we'll get to that later I think and on on this panel uh this that's kind of like really the the the broader model so the advantage the disadvantage is it's it's basically that the advantages of it it can scale if you can find good collateral to uh the uh to accept to make the token um like well you know you start with E and then you can add uh well obviously you can add other stable coins but they're not necessarily like volatile uh assets uh so that's that's that's a way and then you probably add uh other stable coins that not necessarily uh stable in in nature and that it basically uh scales now um it's that's to my understanding like the advantages and disadvantages of this type of model uh and I think uh well I mean if you look at the success of of the eye I think it's well pretty much succeeded uh and and scaled I think very much uh uh that's that's uh that's one that's second one now I think there's a third type which is the algorithmic ones that we've we've talked about uh um like the recent ones that have is is is is basically I think your curve USD is you can consider obviously liquidy is is uh is is the Premier uh a protocol that introduced that um and uh I think the uh it's pure effect so that's for a lot of users that's uh that's a big Advantage if you're uh if you're a decentralization maxi you probably use uh lesd I think and uh it's uh it's the the kind of like uh paradoxical uh use case is that it's actually the new Refuge if there's any bad event out there in the economy or defy in general you would actually want to own uh and and mint LASD uh because uh well uh well but that does not necessarily improve it uh does not encourage you to own it in in um in that during that time because if you actually meant die you have you have a short on on the scripta asset because you would want die to go down in value so you could repair your your debt uh with just less with that at the discount uh so that that doesn't necessarily encourage so for the ldsd users it's not necessarily it does does not encourage users to uh to own it some of them in a in a bad uh uh environment so that's uh that's pretty much uh kind of like an overview of them I think we've covered like pretty much uh three use cases for three different types of of type of coins right now yeah you want to add anything yes I think um in terms of uh Peg maintenance all right [Music] your direct number five simple projector [Music] they're like okay [Music] when you uh sorry okay when it's a bit loud yeah it's the right yes but you you don't hear anything you catch it okay so okay okay perfect perfect so what was I saying I was saying when you don't have when you don't have Arbitrage opportunities then so for example for cdps like stable consuming with debt either like for example liquidy it's it's it often debug upward because you cannot but it's for meme for meme it's kind of the same the other way around right you can you can buy it to depak to repay your debt but if you don't have a debt you cannot really Arbitrage right so for those for those saber coins you need to heavily incentivize liquidity um through values pools generally the home for stable coins is curve obviously um balancer Factor the curve uh stable swap contract so it's also a good solution um Maverick just uh went out a few months ago and has some kind of evolution of uni swap V3 uh contract which allows for concentrated smart liquidity provision so that's one thing how to set up your pool and then you need to pour a lot of money in terms of incentives to make sure people actually take the risk of the peg um and and yeah and then it becomes a war of of who gets the more more money to be able to incentivize more Etc and if you incentivize with your own governance token it has some limits because obviously it's you know later starts going down and then the incentive goes down as well Etc so I think what we are working on at stickdale for example for it's not stable coins but it's it's uh liquid staking derivative so it's same stuff um is is having a a liquidity maintenance fee out of the yield generated by the uh the asset that will be used to pay bribes to pay like votes incentives or to acquire some voting power which will enable long-term liquidity incentivization and stuff but it's there's no perfect solution and I think we will see a lot of engineering uh around that I think frax has been fairly Innovative in that space with their fluxes notably um but it's another topic it's more they've been very aggressive on their on on their liquidity maintenance and and actually generating a lot of Revenue out of the liquidity maintenance so what what was the liability they made it to strength it's very interesting we made it so that they basically made it so that if you're not lping it you're donating your yield away yeah um which is clever but you know a little devious yeah and I I think also the design that has some some limits in in the sense that you always need deep liquidity at the peg that's why they maintain like a a large curve pool uh and and in I mean they they Farm a lot of tokens and they can can bribe and buy back the token right but in other uh designs we it doesn't cost as much we don't need that much liquidity I think liquid is uh stable pools like these pools that stabilize it doesn't you don't need them to be in um in in such depth to maintain uh to always liquidate in case um if uh price drops um so yeah I think we're transitioning into that yeah yeah so yeah we kind of touched upon like secondary markets and how that impacts uh the peg um obviously you know the peg is impacted by not just the internal mechanisms but also the mechanisms um in both even you know tangential lending markets as well as secondary markets um so yeah can we uh talk about that and touch upon those topics as I said before that our protocol is uh basically use this uh flow of value from our trading pools to our omnipost or our stables and we use this actively we are close I think with functionality to flux but we are for now less aggressive than them obviously created the provision and also uh we use our own omnipus I mean that we deploy for each our stable coins we have two types of uh pools and one for bringing Revenue another one for UC stabilization mechanism and of course inside we think to how we can right now we're working only with uh trading pools I mean curve I mean add audibles but inside we investigate the opportunity to use also Landing pulse but with Landing pools we see see some differences difficulties and right now we can't use them yeah I find this question particularly interesting because I find that the term secondary market for stable coins is a bit of a misnomer there's a lot of levers and influence a D5 protocol can put into you know deciding how the the secondary Market plays out for example with um maker or liquidy neither of them are hard pegged at one dollar you know maker is now but LUSD um floats between a dollar and a dollar ten because of one it's Redemption and two it's system collateral ratio um so sometimes it still floats above maker has solved this with the PSM which I find to be just you know another form of a secondary Market you could trade die one for one with usdc usdt um and you know even traditional secondary markets curve um MIM places tremendous influence on on how the MIM price is with a tremendous like a ridiculously high a factor such that it never really deviates um and and in doing so you know it helps it maintain a hard Peg of one um and you know you might say stuff like this is obvious you want your stable coin to stay at one dollar but it doesn't always go the right way um for example with the LST protocol Libra Finance they have the eusd stablecoin which is over collateralized by uh St eth um and they I don't know if mistakenly they they create a curved V2 cool for for eusd such that you know it's treated as a volatile asset it doesn't you know it doesn't really opinionately stay at one dollar and so you know it's the packed upwards to 1.07 I think and that that represents a risk for its users um you know its debt asset is appreciating and so there's yeah a lot of levers and interesting you know ways to approach secondary market up pegging yes sure and um yeah so I took a bit further I started the subject between human to go a bit further I think when you think about it liquidity provision it's kind of a lending Dynamic right new Landing uh some of your say ah hard stable coins to guarantee the liquidity of of another stablecoin and so it's still ending where the value of what you learn actually fluctuates with the peg I think um smart ways to to incentivize liquidity around the peg is is to have probably several pools with different a factors on curve so that would mean for everyone it would mean that um on a certain range of trading the peg would be extremely stable and then if you you go a bit further uh then you will see much more of a XY Eagle k um price movements so you keep something which is which is solid Arbitrage but but that can have large volumes around the peg that's interesting I think um using Landing as as we were discussing just before this panel using Landing pools to have a heart Peg and up to a certain point before before this goes to using a normal liquidity pool and having like soft pegs can also be away uh so yes just like a few ideas around that and then yeah can we speak about the secondary Market I think the point of a stable coin is to be used is to be like a currency rate so it's not really a secondary Market um yeah I don't know if you anyone wants to add anything yeah just to add on yeah I thought Libra was a particularly interesting case study um you know in addition to kind of uh having like a V2 curve style pool um in some ways there was uh you know kind of a meaningful um um you know supply and demand side imbalance there um because it was just like pretty profitable to just hold eusd and get I think eight percent yield off of that so the demand to to obviously hold was a bit higher than the demand to to Mint um the stable coin um so that kind of led to the temporary d-peg upwards um you know kind of moving forward we kind of you know talked about the different trade-offs um around you know uh you know scalability uh security and decentralization you know at this point we're kind of seeing maybe a trend towards um some stable coins um prioritizing um scalability and growth maybe over the other parts of the trilemma um what are your thoughts on you know that kind of um um you know shift towards um growth and maybe you know rwas um and um you know other other sources of collateral versus just having a crypto native collateral assets foreign for growth is is actually quite critical a stable coin with low I mean it depends on what you want to do with your stable coin if it's a savings account then you don't care really much about size right obviously the bigger the more successful will be your protocol but if you aim to have a stable coin that is used as a currency at some point you need need to be in every pocket right uh so obviously that can need stay back on protocols uh to take a bit of risk on the on on on aggressive growth with the low low liquidity projector um I think that the real Wonder set trend is very interesting I I really like um what undo Finance is being doing those past few months with the the flux protocol so that they really allow everyone to benefit from uh treasury yield to a result um without having to kyc Etc because you actually benefit from this yield uh by lending money to people uh work UIC then are able to buy those treasuries and or tokenized treasuries so it's extremely interesting I think this would be the floor for having a a good like risk-free rate in crypto which is decent obviously in the past bear Market we suffered a lot from the fact that uh rates in traditional Finance went up and down in defy and I think it was a major um major categies of this drop in tvl I know for a fact that a lot of phones who were using uh defy as young sources to generate 10 12 returns could just have treasuries for four percent and would be very happy with that so obviously the screen World asset trend is extremely extremely interesting and and should be like a key part of the next run I think yeah I'll probably add uh something well it's really about the collateral type uh the quality of it and the perceived value um and um you know we have Fiat money today that's a real world asset backing like with usdc and usdt and uh and uh Fiat money and of course something closer to it like tables and all uh those things and it's really about uh you know the trust the system or not do you trust it or not I don't know I I think we've seen with the recent uh uh you might uh have your money deposited uh the circle have money deposited with or at a certain bank and the bank doesn't keep the right reserves and all of a sudden this stable coin becomes uh under collateralized and um and that creates uh some some some serious issues and so that system how transparent it is it's more of the system it's more of the system you sit in place so if you want to call that system as an oracle that keeps track of uh the the funds backing or the type of collateral backing the stable coin uh well the Fiat back Fiat money back stay with coin that's one system that you need do you also uh need to you need to track all all the systems around it and I think it's all about this uh so that's that's how a certain stablecoin uh uh back bar real world asset becomes resilient now the second aspect is what is again the collateral type we're talking about is it just uh something closer something you can liquidate easy to like tables okay that's that's that's okay or Fiat money uh but then if you go beyond that for example uh gold I think is a is something that and not hasn't seen a lot of uh there are a couple of protocols doing that which is kind of like the issue a claim on on actually physical gold but then they're also you now you're talking about you need the legal framework around it what if something happens and you need to see is that you want to claim that goal maybe probably never have to claim it but if you claim it to 100 how do you do that right uh it's uh so it's it depends then on the reputation of the issuer and then if you go beyond that for example what if you have this building if you want to tokenize it and issue a stable coin and and say like well this is you know so it's it's quite complicated I I think right now what we're looking at is a pretty much Fiat money and and gold and and maybe some kind of like you know Securities uh that are super liquid that can be uh liquid and backed by uh were reputable uh entities like American government for example I'm from just you know a liquidation perspective like if the at real or assets are not very liquid and can't be atomically liquidated by Liquidators then yeah it just probably liquidity has to be very important even for the real world assets on chain um you know speaking you know about growth um would love to pick your brains a little bit more you know we talked about you know how you know stable coins can be um adopted more broadly um to you what what do you think are the the main um what needs to happen in order for us to see like next big wave of stable coin adoption and growth people yeah I just want to touch on the last Point um just a little more um uh on you know sort of how to approach That trilemma Make Her die being a good case study of you know how people you know sort of say how has lost his path by you know becoming just wrapped USD and usdc and you know I find that that view to be productive you know it does a lot more than that it's primary growth strategy now is an rwa um you know it's still got a ton of eth collateral um of course the PSM um sacrifices a little bit of that decentralization for um you know a lot more scalability and stability and so that's you know that's the right approach to take um you gotta you you kind of approach all three um tenets of a successful stablecoin and of course you know other stable coins such as liquidies LUSD can be decentralized decentralization vaccines and still you know succeed that way but you know we've seen maker scale and and I don't think that's a bad Approach at all um and so you know about that um you know the path to adoption diversification is one and um it's I want to bring Reserve as an example of how it's sort of integrated real world rails into crypto it out Reserve you know there's a D5 protocol part of it but there's also a Money Services app where it allows um people in Latin America to access the American dollar and transact with vendors because you know they face the problem of hyperinflation and under the hood it's it's powered by defy um it's called eusd which you know Libras also has also annoyingly called their stablecoin um but that's that's one of the ways and you know um a couple of the other important factors I mentioned it being a diversified asset um being put in real world scenarios is one of those big paths to adoption and you know true ux is allowing the end user to not to not need to know how to deal with crypto not not know they're dealing in crypto and you know under the hood they could be swapping in all these you know long tail assets essentially for usdc liquidity But ultimately they're paying for a burger and and that's that's what the event game a stablecoin hopefully looks like um just I want to add something so from an issuer's perspective if I'm uh if I'm thinking about a growth strategy for uh an issuer from a stablecoin issuer I would be thinking about of course number one liquidity layer you want your uh your stable coin to be highly liquid so users so become sticky yes it becomes accessible for users now there's something that uh probably I will touch on is that the role of lending markets just in terms of growth from an issuer's perspective before we get to the user um and I've seen this uh being ignored a lot by stablecoin issuers so why uh do in my opinion stable coins need lending markets and this is something uh Dalai has done really uh successfully with obviously peggybacking Ave uh so number one uh lending markets actually create demand for a stable coin so think about uh so to use an analogy uh think about uh well there is natural gas and there is oil and there's cars but cars create Demand only for uh for oil not for natural gas so put it in the perspective of lending well you've taken a loan you've denominated an asset with a stable coin now you need to pay interest well how do you pay your interest there's a repayment that happens so you have to pay it in the same stable coin that you borrowed so that creates more demand it's a more demanding so basically that's that's how one one aspect how to grow it now the landing markets also uh have two um positive impacts on the stability of the stable coin which is a major ux point for users holding a stable coin so number one if you denominate debt in a stable coin uh now uh there is uh interest that need to be uh so basically denominate that in stablecoin and let's say this stablecoin goes to 95 and this uh if there is a user uh so basically if if there is a user with that uh has that in a stable coin at that moment the user is motivated to actually repay at a discount uh and this is great for the stability of the of the stable coin um so that's uh number one a number number one aspect of the positive aspect of of lending markets on on stable coins uh so it's a sort of sort of a Perpetual bid from a user perspective um uh so second one which is actually interesting um it's the short squeeze that you create because you borrow let's say 100 in a year assuming there's ten percent interest now you have to repay 110 so this ten dollar is actually a short squeeze on the stable coin and that helps with the stability of the stable coins so these two aspects between the Perpetual bed because you'll always be a user willing to repay the debt once this if it depends and the second one which is uh I think uh equally important which is short squeeze because you always generate interest and you have to repay it in the same stable coin these two aspects impact the stability of the stable coin now these two aspects from a network perspective create this kind of perfect stable coin and now we can move into kind of like how do I make it accessible for users I mean of course the on-ramp systems and and indexes and and everything else so just wanted to touch on that also related to the growth of of the stable coin uh in tsunami we of course are interested in liquidities Taken derivatives and the huge growth of such market and how we can use uh connect this liquidity second derivative with trading pools because we are using our own mechanic to move money from liquidity is taking derivative to the trading pools and back and using our own tokens for stable tokens for such case and of course I think we will saw see a lot of innovation in such space because it's huge market and it will only grow yeah and to um add on to a little uh bit to the lending piece as well um yeah I totally agree like usage is is key here composability is key um and generally when you know listing stable coins and lending markets uh the risks risk through the lending Market is lower if the stable coin is only enabled for borrowing not as a collateral um and it seems like that is kind of the one of the major use cases is lending out your stable coins so it can be borrowed um for for leverage or otherwise um so generally speaking you know when when stable coins are trying to list on lending protocols um if um collateral is not enabled but borrowing is enabled that um generally increases the chances that the community will support that that type of listing um and in terms of you know the adoption I like how we kind of broke it out between kind of the issue of perspective and and the user perspective you know from I guess the the issuer perspective um it seems like one of the challenges moving forward will be you know how can we equalize or I guess make DFI yield more competitive with off-chain yield that seems to be one of the main you know strategies behind makers a kind of end game is you know we know that D5 yield is um is more volatile uh than than off-chain yield um so kind of Bridging the Gap there um creates more stickiness from that perspective and on the user side I think maybe thinking more long term um zero knowledge is probably going to be a major driver if we can actually integrate that with stablecoin users now you can like purchase things and you know people don't necessarily need to know about what you're what you're buying out there um so that's probably like a longer term um development um you know I think we've talked a ton about um USD denominated stable coins those are obviously not the only types of stable coins um what are your thoughts on you know non-usd denominated stable coins um yours or otherwise yeah I mean um no yes I get the first one that comes uh to mine after the daughter is is Euro right and so we on as they know we are fairly close to a protocol called anger um which issues a Euro stable coin called AG Euro they're also working I think on your on a good stable coin uh I mean at least I saw a proposal about it but that was before the earlier act so I don't know where it is now maybe a bit lost but yet they have managed to to to build a strong uh Euro stable coin that quickly became uh the the biggest I think in terms of volume and also probably in terms of supply and it's it's a fully decentralized one um which has had a very interesting uh design where people could take the risk it was backed by stable dollars um can be good there is a legal issue in Europe where if you're back by actual uh Euro I'm not an expert but it creates issues right so you're much better off backing it with dollars so they they had a mechanism splitting the euro dollar risk um I'm ripping it out from the stable coin and giving it to people who were happy to short your um so using Perpetual Futures that was very interesting a bit difficult to scale a bit risky so now I think they are moving to a CDP uh model which is uh which is good but actually it was super nice to be able to shoot you with Max leverage at that point so anyway that being said I think there is a demand for other than dollar stable coins because when you see how how the the regulator in the US is behaving towards crypto defy stable coins whatever right um and and when you see how they behave in the normal traditional markets for anyone who uses dollar I mean in France we've suffered from that a couple times right uh transaction happening in daughter in whatever country whatever and ends up having the US regulator saying okay this belongs to me or whatever right so the the US dollar actually Bears some um inherent risk which could contaminate stablecoin dollars right um so I think there's a rational for um other stable coins also we've seen like massive price movements between I mean Me Myself and paid in dollars I live in Europe um Euro went from 90 cents to 1.1 dollar last year so I lost 20 percent of my income right I think just this simple fact creates some Demand right also there's a lot of noise those past few weeks about the brics currency I don't know if you've heard about that it's very funny very interesting um so yeah I guess at some point that that could be an interesting currency as well to have in in defy uh I don't know we'll see how it goes um yeah all great points but I I take a rather pessimistic view that the the current on-chain use of non-usd denominated stable coins is for Forex uh speculation uh particularly for shorting the URL um for example you know you meant AG EUR and and dump it for usdc or you know other ones but you know the on-chain demand for stable coins will really mirror the the real world demand and you know I would love um more than anything to see the end of US dollar hegemony um whether it's with bricks or you know just back to um The Reserve gold Reserve standard and um but but the reality is we're we're good to mirror those markets for for the foreseeable future you know I think if we take euro dollar as an example um I honestly don't know uh why it hasn't uh like gained ground is it because uh a certain protocol let's say angle or any has not established enough liquidity for it so for to make it easy for users let's say to a minute or or redeem it or um or just simply hold it actually um or if it's just users probably just minute it to short that's different so we don't know if that's the case so there isn't uh so some of ux problems or it is actually there isn't any Demand on it but if I one use case if I lived in Europe I would want to be be played in your electronic kind of kind of way or uh um a some sort of derivative uh because I live here like oversee you want to be paid like you pay your rent in Europe you spend so one use case so I don't know why um this is not a possibility is it because of this lack of liquidity is it because of lack of motivated user um we don't know it's but for sure like there's some liquidity on I think uniswap uh for you know swap V3 for for the AG year I think it's had been uh pretty stable uh prior to the Euler hack specifically because I think angle used the order as a as a layer to optimize Zeal or actually earn yield uh using the money backing the the stable coin this is uh probably the changing the the design right now or they have I've done that already uh so yeah it has some liquidity but didn't have any uh lending markets uh didn't have any uh I don't think a majority of of all those protocols where you could process payments um they didn't list any any kind of uh anything other than the you know the dollar uh back stablecon so it could be either the user experience or just simply there's no demand uh for for any uh stable coin that is not backed by US dollars yeah I think uh I think I only has the point on why there is not much demand for other dollar stablecoin right it's because ninety percent and maybe 95 of the international transfers are denominated in dollars in the real world so it's normal that it would be the same in um on chain right uh however I would be less optimistic pessimistic than you right I mean if you look at so why why those International transfers are denominated in dollars it's because dollars is the world Reserve currency rate it's uh more than 95 percent of the composition of reserves of any country right even in Russia it's still around 50 percent of the reserves and if you look at historically how the composition of reserves evolved in in the world over the past Century 100 years ago it was 100 pounds right Sterling or nearly 100 right and after the war decoration Etc it progressively moved from the pound to the dollar right so obviously we're not talking a couple years from now right but a single century was enough to change that right and I think this century is seeing um events which are as remarkable as as the 20s so obviously we don't have a third world war right of course but I think the fact that now the the brics GDP exceeds uh the G7 plus GDB like I think it's from a couple of years now or something like that it's it's a massive change and it will accelerate and so we are not fully sure that in 50 years from now uh the dollar will stay the the basic Reserve currency well you know that actually uh interestingly that for example China and other countries they have to invest in U.S treasuries uh just in case the dollar loses value because if you have dollar back in your currency as well you would want your currency to go down with the dollar not become more expensive because then export gets more expensive and all of a sudden you have a catastrophe on your own so you have to devalue your your local currency in response to Dollar that's why they invest not because and because they're stuck everyone is in stock everyone is global Reserve currency and you have to buy it so it's a perfect system yeah Mike might have some interesting perspective on um the Turkish Lyra which which there is a on-chain stable coin for the nrzd I think um yeah yeah that's the one that's the one tribe yeah yeah do you yeah do you know anything about that one oh no no no no no no yeah um yeah I I know that uh in in hyper inflated economies like uh like turkey and I think uh certain issues also in in Argentina uh but a lot of Turkish people have complained a lot and uh the probably sought cryptocurrency as a refuge store of value and I think uh that's on its own is a huge huge use case for users and I think uh for people the normal people you wouldn't uh mind uh to uh to to own or to store their value in any of external stable coins uh be it U.S dollar or UB Euro or whatever as long as you trust your issuer this is becomes extremely important because if you have an issuer A stablecoin issuer that backs uh you know that doesn't have a transparent system or they use collateral or they you keep their money at a in a in a certain bank that is not to be trusted or something like that well then you also lose your money so but yeah yeah yeah this is sort of like a Meta Even level conversation of like you know what are kind of the main uses of like USD denominator stable coins this is just you know for people around the world to get access to US dollars because it's the world's Reserve currency if that's the case then the majority of the stable coin um adoption will be in whatever currency is the global Reserve currency but if it's in to facilitate Commerce more broadly then there's you know a broader case we made around um you know euro dollar euro denominated uh stable coins and and likewise um so yeah recognize that we only have a few minutes left um we'll kind of Briefly summarize um the the conversation um and then you know open up the audience for questions um but to kind of you know summarize what we talked about we started off the conversation um around discussing a different uh Peg mechanisms and the trade-offs there uh for example um like um outlined um some of the design mechanism updates that tsunami has made to kind of integrate both the reserve and uh income and Reserve income reserve and stability mechanisms um we then kind of talked about um you know the role that other markets like lending markets and um and secondary markets kind of play um in in the peg mechanism um both in sort of diversifying the liquidity sources and um driving more um usage from being listed on lending protocols and then we discussed different growth strategies um for for stable coins and um stable coins Beyond just uh the US dollar but before we kind of open up um the audience to questions um you know if anyone wants to contact any of you guys um what's the best contact info for them to do so uh tsunami we have stand here you can come to talk with us and discuss this uh after uh automated big stability mechanism with pleasure we will discuss it it's open source we can talk about that we have stand and of course after this talk we will be here so to chat well you can contact me at Silo Finance just go to Twitter and DM and I'll I'll respond to you or one of the team members um um yeah thank you Mike and tsunami for hosting this again and for inviting us this was great discussion uh but to get in touch with me you can find Reserve protocol on Twitter you know same here you can contact me on Twitter uh you look for uberb and uh or or just go to the telegram stick though you can find it on the on the UI um and as long as you're not proposing an amazing marketing opportunity you shouldn't have any issue listing opportunity or or having 11 years of full stack uh full stack Dev experience normally it should be okay oh and uh yeah I got lit we're always excited to partner um with more teams in the space um so if you're a developer in stable coins or working around stable coins feel free to reach out to me at paulaj at Twitter or just our Gauntlet Twitter um so yeah I'll open up the floor for any questions from the audience I guess we covered everything um there's certain protocols and teams that are working on historic value which aren't really pegged to anything like Olympus dial would be the most known example of that I'm wondering if you have any thoughts on that if you think that's a valuable thing to build because that could be like an alternative to the USD taken up most of the the show yeah right sort of in the same boat where it's a really interesting idea um a floating tank sort of a floating Peg Reserve currency Olympus and Rye um but they're sort of I'd say their appeal is more Niche at this point um you know vitalik's a great fan of of Rye he's mentioned it a lot of times um and it sort of serves as a dampened USD um um in line with each price movements and these are all really interesting experiments to have and I think very worthwhile continuing to explore yeah I think unless I'm wrong it's the end game for maker right they want to be not picked to the US dollar at the end right I don't know we'll see a lot of people try that if you think about it ether is already or Bitcoin was supposed to be something like that right I guess we'll see um I I don't know if you if you know is working on something like that it's called f of x or FX it's it's basically a beneather which is 10x less volatile right so if is does plus 10 percent FX does plus one percent right so it's it's a uh like soft ease right we'll see I I struggled to see the the real demand for it unfortunately I think FBI FBI was not uninteresting as well it's uh it's an inflation adjusted stablecoin issued by frax so basically so it's algorithmic right so it's not really characterized or at least the collateral [Music] has some lag compared to the the the supply uh but it's a way to not suffer from inflation still using saber coins um yeah I think particularly um is a is a great example that represents a basket of of assets and now you're trusting that these assets and the Holdings the Dow is holding uh you know uh put them to work in a in a way that will accrue value to home itself and then uh ohm keep increasing value I think it's a it's a great way they're trying to work on at home and and similar to them they're trying to make that um token as a pretty much a unit of account for their Community where basically you just own it and they try to even now for example on on Silo uh they have Landing markets for home for the users because users trust own so you hold it but now you want to leverage you want to borrow for example usdc against it so it becomes like a unit of account for the I don't have to exchange it for anything else I can use it in multiple protocols and because it accrues value so you can expect a certain field could be kind of Auto compounded to it without any staking because it's just holding it and uh so but but more or less you're relying on the Dao and the sensibility of the dial of investing uh home and uh and and the treasury itself because it all becomes kind of representation the abstract of of everything that the Dow does uh if you were legendaries [Music] because everything everything resolves to the dollar um whether it's euros Singaporean dollars uh Turkish liras just the same way as it's the settlement currency in global Finance um and so just as people don't you know convert their Holdings to uh Euros you know an American wouldn't you know they would never you know someone Living in America all their entire life has never interacted with an euro um that you know lessens the uh you know like likewise lessens the on-chain appeal per Euro um there are still Niche use cases um speculation and you know for for citizens of of the EU uh it has it has absolutely has uses because you're going to transact um in that exact currency but um I'm just talking for in terms of dominance um it sort of explains why yeah it doesn't matter how you issue it how you maintain it the same questions honestly I think uh we if we've talked about the AG Euro I'm not sure how it's minted and of angle uh protocol I'm not sure how it is minted and how how the peg is maintained but the same question I think the same fundamentals apply to all of them uh I think what we just talked about here is is more of is there a demand on it is there a use case because I mean technically that is not denominated in in Europe at all I mean not trading isn't even uh but as far as maybe on retail level another wholesale level maybe there are some use cases for for users of wanting to be paid and some some transaction to be settled even maybe a small Merchants whatever but yeah before [Applause]