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Suggestion: XRP-collateralized Stablecoins


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One of the original use cases for the XRP Ledger (since 2012) was using the built-in decentralized exchange to exchange between stablecoins and to exchange stablecoins for XRP. Currently, only stablec

I made a video giving more details on the proposed design.  

The advantage is that if you hold XRP directly, the value of what you hold changes over time. Some people want that, some people don't. This scheme lets those that want that hold XRP and those that do

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21 hours ago, Sukrim said:

There is also the risk of collusion between the parties operating the Codius contracts or them getting hacked. "Triggering a XRPL transaction" means signing it with one or several private keys. Where should these keys be generated and stored?

I agree that the risk of storing the private keys of the account managing the StableCoin in a Codius contract would be too high.

I’m not in favor of using XRPL for consensus on price, I would try to keep XRPL as simple as possible.

My proposal would be that the StableCoin creation logic in XRPL should include parameters to facilitate the Codius price feed case. Something like allowing the option of signing price transactions with a special key, different to the account key,, and that the main account key still keeps the power to reset that second key if compromised, that way the Codius contract would only risk the price feed control temporarily if compromised.

 

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The problem is that,  those publisher accounts should retain the power to control de price feed if we want to remove the risk from a non fully trusted administrator.

So if we move the publisher accounts keys to a Codius contract we could automate and decentralized the pricing process, the trade off is that we move the risk to the Codius contract, which could be hacked and a 3rd party take control of the price feed.

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3 hours ago, Sukrim said:

About validators providing price feeds: I'd rather see XRPL-internal price feeds first before external data feeds get considered. E.g. a trustless (at lesat trustless for the pricing data part) stablecoin based on the on-ledger USD/Bitstamp market.

that's what i was getting at with my proposal, that could you feed in multiple price sources, some on-ledger e.g. USD.bitstamp, but take an average of that plus other gateways or external sources ? but you'd have to aggregate them somehow -- and consider flash crashes in low liquidity (maybe just slow it down with daily close/open prices or long intervals)

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41 minutes ago, Odiseo said:

So if we move the publisher accounts keys to a Codius contract we could automate and decentralized the pricing process, the trade off is that we move the risk to the Codius contract, which could be hacked and a 3rd party take control of the price feed.

i still wonder if, just as XRPL consensus aggregates agreement on transaction processing, and functions despite/assuming bad actors and collusion (e.g. 80% rule), so in theory we could achieve the same with price pegs given a threshold of agreement around one or multiple sources of price feed

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I personally wouldn’t add more tasks to the XRPL consensus process, it’s probably the more importan process inside XRPL, I would keep it as simple as possible unless really necessary. I would move it to an external consensus in Codius or other smart contract platform, where you can design it as decentralized a you want.

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27 minutes ago, Odiseo said:

I would move it to an external consensus in Codius or other smart contract platform

yep i'm not saying it has to be on the main network, although of course that's what gives it its "native" power -- worth trying elsewhere first perhaps, the first ever "consensus pegged stablecoin" project ?!

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A simple yet powerful peg IMO can be that the creator of the currency pegs it to another IOU or the pegged IOU itself market. If it is related to another IOU it could take a "multiplier" coefficient, for example 10 times CNY.ripplefox.

In this way there is not a single entity that can modify the price, but it's market related.

The drawback is that if the other currency collapse, the pegged currency collapses itself.

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4 hours ago, tulo said:

In this way there is not a single entity that can modify the price, but it's market related.

that's why i'm asking if there's a way to peg to an average of multiple price feeds (on and/or off ledger), and use consensus to validate feeds sort of like the way actual transactions are done -- so if one weak point does fail, it's like a bad actor manipulating an XRPL transaction 

problem is you'd need enough sources or validators engaging in validation, but then again if you don't have lots of people providing liquidity it doesn't work anyway (just like ripple couldn't decentralise the XRPL until they slowly, carefully added trusted parties one by one, until a critical mass 

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Just my thoughts out loud:

I think all ideas from: Ideas for the Future of XRP Ledger - it's good ideas

But "XRP-collateralized stablecoin" maybe is not a priority at the moment since I don’t like the fact that someone has to centrally set the price/rate, if someone comes up with how to solve this problem without loading the XRPL with excessive functionality, then it will be cool.

Better concentrate on the rest of this list.

Thanks

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looks like arthur breitman's been working on similar ideas

links: https://checker.is / https://soundcloud.com/tezonomics/ep19-introducing-checker-with-arthur-breitman

@JoelKatz is it worth reaching out?

esp. if you could do something using xrp collateral against the Tezos chain, and now that we've seen even Binance doing derivatives and others playing with cross-chain swaps, collateralization, etc 

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