Thread by @StylesGrant

My opinion on why making a new stable coin onchain that is not pegged to the dollar, is difficult for now, is that we don't have advanced enough onchain derivatives with enough liquidity, mostly due to lack of sharding/merger.

MakerDao is not really advanced enough to offer serious yield/return and serious hedging, but it is clear relying on tether and brick and mortar bank & institution/broker is a doomed proposition, as is 0 collateral ponzu like UST.

The existence of automated finance with KYC'd regulated liquidity providers and their quasi DeFi onchain derivatives will be necessary in order for those entities to hedge against government security tokens/bonds/etc, then the money can be converted to ethereum & sent to the

fully anonymous real DeFi smart contracts that aren't allowed to interact with US stablecoins, using smart contract features. It's still a public finance common with Daos, VC, etc injecting liquidity/cash, just dependent on automated finance

Now I'm sure Fatf & ECB & brussels want to stop this, but it will be hard to do with ethereum as long as hardware wallets do not require KYC, and regulatory arbitrage exists. Not every country will stupidly felonize entities providing liquidity to true full anon DeFi.

Trying to collateralize the entire market cap of tether onchain & then hedge it with full onchain derivatives is impossible currently, you need the ability to trade government securities onchain, this is likely not going to happen without intense regulation/kyc.

The idea is to hopefully get the ethereum off of the CeDeFi and onto true DeFi. The benefit of automated finance is it creates custodial regulated backed liquidity for Ethereum in general still, the tokens have to be collateralized, & this secondary corrallary helps true DeFi

They were going to do this anyways, the inevitable nature of it, even with intensive retina scans & intrusive kyc, even these Tradfi dinosaur will support congressionally scrutinized, tokenized bonds & stocks, they've done so already for Pax Gold.

How might they forbid the exchange of these ERC-20 government securities to a non travel compliant smart contract and or wallet. Well honestly I'm not sure how they can do it onchain other than narcware wallets & offchain felonies, but they're thinking on how for sure.

My guess is they issue synth versions of the token in the same closed garden SC system, which can be burnt by that Dao, and the true token is only issued to verified entities & addresses, where multisig is required to send the token out of those addresses.

They may even try to do this to USDC and Tether so that if you wander off the reservation, they burn your synth tokens if they aren't kept out of certain smart contracts or foreign exchanges. That's why I don't trust USD stablecoin whatsoever.

It's clearly why in order for true global public finance commons with no prejudice in the form of kyc to exist, we must exit from USD stablecoins to a new asset based on a broad basket of real world instruments, & then collateralize that onchain.

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