1.
Day 7/30 of @THORChain threads
Subject : Collateralized stablecoins
This is pre-requisit knowledge for understanding the THORfi breakdown ๐งต โฌ๏ธ
Day 7/30 of @THORChain threads
Subject : Collateralized stablecoins
This is pre-requisit knowledge for understanding the THORfi breakdown ๐งต โฌ๏ธ
2.
Contest :
I will give away TWO Brookr NFTs among everyone who retweets the first part of the thread.
@BrokkrFinance is having it's token launch event soon. Holders will get a $bro token airdrop.
Contest :
I will give away TWO Brookr NFTs among everyone who retweets the first part of the thread.
@BrokkrFinance is having it's token launch event soon. Holders will get a $bro token airdrop.
2.
The first generation of stablecoins are backed by FIAT. $usdc and $usdt are part of this. They are centralized, they censor transactions and address centrally. They are subject to regulatory capture. Not the best asset to build DEFI on.
The first generation of stablecoins are backed by FIAT. $usdc and $usdt are part of this. They are centralized, they censor transactions and address centrally. They are subject to regulatory capture. Not the best asset to build DEFI on.
4.
The 2nd generation are collateralized stablecoins. Crypto assets are deposited in a vault and it allows you to mint a token representing $1 of value.
If the value of the assets go under $1, they are liquidated.
The 2nd generation are collateralized stablecoins. Crypto assets are deposited in a vault and it allows you to mint a token representing $1 of value.
If the value of the assets go under $1, they are liquidated.
5.
@MakerDAO blazed a new trail in 2018. For the first time users could deposit ETH into a smart contract and withdraw an IOU redeemable for 1 USD worth of ETH. This token was named DAI after cryptographer Wei dai.
@MakerDAO blazed a new trail in 2018. For the first time users could deposit ETH into a smart contract and withdraw an IOU redeemable for 1 USD worth of ETH. This token was named DAI after cryptographer Wei dai.
6.
@MakerDAO's design completely blew my mind. It was the first time I started to understand the real implications of DEFI and that it was possible to really create a fully decentralized financial system with borrowing, lending, derivatives etc.
@MakerDAO's design completely blew my mind. It was the first time I started to understand the real implications of DEFI and that it was possible to really create a fully decentralized financial system with borrowing, lending, derivatives etc.
7.
The model was initially met with many reactions. And the Makerdao community ethos has since held safety and control in high regard. Many still believe that the interest on the debt controls the price of dai, and that many forms of collateral are a threat to the overall system
The model was initially met with many reactions. And the Makerdao community ethos has since held safety and control in high regard. Many still believe that the interest on the debt controls the price of dai, and that many forms of collateral are a threat to the overall system
8.
This caution has resulted in Makerdao not capitalizing much on its first mover advantage. I remember listening to their calls, most of the time was spent talking about setting interest rates to keep the peg.
This caution has resulted in Makerdao not capitalizing much on its first mover advantage. I remember listening to their calls, most of the time was spent talking about setting interest rates to keep the peg.
9.
I was fascinated by the subject and deducted after a while that interest rate had nothing to do with peg.
I suggested an interest free collateralized stablecoin to @THORChain about a year ago.
I was fascinated by the subject and deducted after a while that interest rate had nothing to do with peg.
I suggested an interest free collateralized stablecoin to @THORChain about a year ago.
10.
This caution has resulted in Makerdao not capitalizing much on its first mover advantage. An opportunity arose for a more aggressive opponent. Enter @MIM_Spell Abracadabra money with its stable coin $MIM (Magic internet money).
This caution has resulted in Makerdao not capitalizing much on its first mover advantage. An opportunity arose for a more aggressive opponent. Enter @MIM_Spell Abracadabra money with its stable coin $MIM (Magic internet money).
11.
This community filled the gaps Makerdao was unwilling to satisfy. It is the zoomer to makerdaos boomer. Memes and growth above all. MIM proliferated cross chain as fast as possible and onboarded new forms of collateral with almost no worry.
This community filled the gaps Makerdao was unwilling to satisfy. It is the zoomer to makerdaos boomer. Memes and growth above all. MIM proliferated cross chain as fast as possible and onboarded new forms of collateral with almost no worry.
12.
In short, Abracadabra held DAIs history as enough evidence that 1$ of usd denominated debt would in the long run be valued by the market at 1$ so long as the debt was overcollateralized.
In short, Abracadabra held DAIs history as enough evidence that 1$ of usd denominated debt would in the long run be valued by the market at 1$ so long as the debt was overcollateralized.
13.
With much initial excitement and prioritizing of growth and expansion where Makerdao didnโt excel, Abracadabra attracted many high risk investors who sought a high yield on their investment.
With much initial excitement and prioritizing of growth and expansion where Makerdao didnโt excel, Abracadabra attracted many high risk investors who sought a high yield on their investment.
14.
When a main team member of a related project (TIMES) was outed as a known scammer, many of these fickle investors left the ecosystem and panic started to spread. The price of abracadabras (equity) token spell tanked and probably still has a long way to bleed out.
When a main team member of a related project (TIMES) was outed as a known scammer, many of these fickle investors left the ecosystem and panic started to spread. The price of abracadabras (equity) token spell tanked and probably still has a long way to bleed out.
15.
I had argued many times that $mim would hold it's peg, along the way with the very smart @tbr90 who thought an interest rate was needed to sustain buying power.
There was a massive bank run, about $3B in volume in 48h.
I had argued many times that $mim would hold it's peg, along the way with the very smart @tbr90 who thought an interest rate was needed to sustain buying power.
There was a massive bank run, about $3B in volume in 48h.
16.
While the stable coin token MIM suffered massive inbalances, with the main liquidity pool on curve.finance MIM+USDC+USDT+DAI ending up consisting of 95% mim, the price of mim never faltered much and has remained near 1$.
While the stable coin token MIM suffered massive inbalances, with the main liquidity pool on curve.finance MIM+USDC+USDT+DAI ending up consisting of 95% mim, the price of mim never faltered much and has remained near 1$.
17.
Enough market participants now understand that the overcollateralized stable coins are in the long run worth 1$ as long as they have a claim to wanted collateral.
Enough market participants now understand that the overcollateralized stable coins are in the long run worth 1$ as long as they have a claim to wanted collateral.
18.
The $1 price is set because people are willing to buy it at $1. If there isn't, it could at least temporarily depeg.
Liquidity coming in buying at the worst possible times is the most important factors in keeping stablecoins stable.
The $1 price is set because people are willing to buy it at $1. If there isn't, it could at least temporarily depeg.
Liquidity coming in buying at the worst possible times is the most important factors in keeping stablecoins stable.
19.
In the thread #8 I will break down the 3rd generation of stables : algorithmic stablecoins.
This will be required knowledge to understand ThorFI's design. ThorFI's Thor.USD will be the 4th gen iteration.
In the thread #8 I will break down the 3rd generation of stables : algorithmic stablecoins.
This will be required knowledge to understand ThorFI's design. ThorFI's Thor.USD will be the 4th gen iteration.
20.
For more threads about @Thorchain and $rune, click here : linktr.ee/thormaximalist
If you are a $rune whale (100k+ $rune) would like to bond to a node while keeping custody, send me in PM.
If you like my content, please delegate to my 0 fees $luna node :)
For more threads about @Thorchain and $rune, click here : linktr.ee/thormaximalist
If you are a $rune whale (100k+ $rune) would like to bond to a node while keeping custody, send me in PM.
If you like my content, please delegate to my 0 fees $luna node :)
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