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Trustline app proposal for stablecoin (Aurei) on Flare Network


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18 minutes ago, Ripley said:

A DAI equivalent. A fiat pegged currency is welcome but I continue to be hesitant about taking crypto loans given the volatile nature of the market.

Yes me too. I am reluctant to even offer up collateral, at least at first. Seeing what happened to those people using Nexo...I'd like to wait a little while to see if those kind of things have been ironed out. 

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6 hours ago, brianwalden said:

To me the big news is that they intend to trustlessly issue this on the XRP ledger. 

I know I've asked about a similar thing before, but why is this a big deal? Is it because of the liquidity it could bring? Or some kind of utility?

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Liquidity is utility. The XRPL isn't the only fast, cheap ledger in town anymore. It was designed to be a multi-currency ledger, but to do that it needs multiple currencies on the ledger that people actually want to use.

I dunno, I see coins as getting their value from the utility of their ledger. This is probably wrong, as a quick perusal of CMC will show otherwise.

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  • 3 months later...

Thought this would be a good time to post some updates.

Matt in Trustline Telegram earlier:

Quote

Matt Rosendin

The Trustline app will require KYC and ProbityDAO will most likely also require KYC as well. This makes the system safer (e.g., stolen funds can be traced and properly remediated). Yes, Probity will be a DAO. The structuring TBD but TCN holders get voting power and up to 100 chairs exist for carrying out distribution of excess liquidity via (most likely) an LLC.

Also the tokenomics are based on stable utility so in my view AUR and TCN cannot be viewed as securities. TCN has supply/demand implications. Since it is mined, there is 0 supply at the start, so the value of 1 TCN may be > $1 (not financial advise) based on limited initial supply. Furthermore I’ll be introducing a governable parameter called the base rate which allows the interest rate to be higher with less interest rate “slippage”

Furthermore @aco1731, to answer your question about how the peg is maintained. I am introducing an incentivized exchange that allows users to exchange FLR and FXRP for AUR without redemption. If AUR > $1, you can buy from the incentivized exchange and sell for a profit on a secondary one (since the incentivized exchange always fixes AUR price to $1 by increasing AUR supply in the liquidity pool). If AUR < $1, you can buy from the incentivized exchange (also called a primary exchange) for cheap, basically earning the difference.

@aco1731

if price below < $1, i could buy at secondary markets for 0.80 usd for example and trade for $1  equivalent XRP\FLR in the incentivized exchange?

Matt Rosendin

Correct

 

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  • 3 weeks later...

Not sure how many people here are in Trustline Telegram - but there have been some very interesting ongoing discussions I'm sure a lot of people here might want to jump into. I'll let Matt speak for himself:

June 10th

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Proposal Alert

Hey everyone, with USD inflation in play (5% annual rate expected) I was wondering what are your thoughts if Aurei were to be instead pegged to gold. 

There would still be a USD-pegged stablecoin too. More on that further down.

The Aurei payments in the mobile app would be denominated in your local currency. 

Example
With a ₳2 balance, and if USD/XAU = $1000, then a $10 payment makes your balance ₳1.990. You can also hold FUSD or other F-Stablecoins and use those for payments instead.

Now imagine if there are various F-Stablecoin markets: FUSD/AUR, FGBP/AUR, FEUR/AUR, FJPY/AUR, etc.

Aurei being a reserve asset that you can trade into and out of different fiat-pegged crypto stablecoins. The mobile app would support these fiat-pegged coins too.

If this is to be done, at launch there will be AUR and FUSD available to start.

This is a part of a broader initiative to add exchanges where you can buy and sell the stablecoins instead of just borrowing.

Liquidity providers will have the option to earn interest income from loans or trading fees from stablecoin markets, in addition to FTSO inflation rewards and F-Asset rewards. Liquidity providers who stake FLR and F-assets in the exchanges don’t face liquidation risk.

Aurei essentially being the first gold-pegged decentralized crypto stablecoin as a reserve asset to fiat-pegged crypto stablecoins markets. All fiat-pegged stablecoins will be redeemable for AUR, similar to a gold standard. AUR is still collateralized by FLR and F-assets.

Importantly, AUR would not be backed by gold, but rather pegged to gold - as the price of gold is even more stable than the US dollar.

Why am I bringing this up now? Well, I’m always trying to improve the system. And the concept occurred to me earlier this week. This is a highly scalable system that can support any number of stablecoins. I’m not trying to pull one on you or make things unnecessarily complicated. Crypto is the future of money, and this can be the greatest monetary experiment of all!

Tweet thread on inflation:

1202771123_Screenshot(1644).thumb.png.2cf5230bf1aa07028ef3ad4a43adbab4.png

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This is just a proposal, and requires community buy-in, so I’ll continue to make my case until it’s been heard, and we can decide from that point if it makes sense to move forward or not ....

... More will come with docs. The gist is this:

Option 1
Stake FLR/F-Assets to earn yield on AUR loans. (The original Probity Vaults concept).

Option 2
Stake FLR/F-Assets in the AUR pools to earn trading fees. The protocol supplies the AUR in these pools.

Option 3
Stake AUR in F-Stablecoin pools to earn trading fees. The protocol supplies the F-Stablecoins in these pools. Staked AUR can be borrowed from option 1.

———
Risks
Option 1: Risk of liquidation penalty 
Options 2 & 3: N/A

Rewards
Option 1: Variable APY
Options 2 & 3: Fees of ~0.3% of trading volume

Quote

TCN is still earned as interest income, or paid out via trading fees. Still stable. Still for governance.

Quote

image.thumb.png.bea2e88076ae274a2098a86134e37fa8.png

I’m really excited about this potential shift. 

When I worked at Ripple I spent a lot of time learning about how banks do FX. And working on a stablecoin is kind of my dream job.

If it works out, there’s going to be an exciting journey ahead.

 

So .... a lengthy discussion around Aurei pegged to gold and the potential for F-Stablecoins. 

Quote

Users will be able to stake AUR in the F-Stablecoin pools ...

It’s going to be possible to trade between stablecoins directly since they all share a market with AUR. You can go FUSD => FJPY. But a second FSC pool is later on the roadmap ...

...  you stake Aurei for the fiat pegged coins and you stake FLR / FXRP / + others potentially to increase AUR supply

You keep control of the AUR when you stake it ... You can withdraw it from the pool whenever, in the same amount you put in, plus accrued fees ...

 

photo.jpg&f=1&nofb=1

:lol:

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One problem about pegging AUR to gold and having that act as the intermediary asset to F-SCs is that if XAU/USD goes down, liquidity for all the F-SCs will go down, as less people will be willing to hold AUR and provide that liquidity.

On the other hand, XDR (International Monetary Fund Special Drawing Rights) is a basket of currency more stable than USD, and would be a good peg for maximum liquidity at the top level.

Currently the spot price of XDR is about $1.44. 

It’s possible that governance can come up with its own basket of currencies (which can include gold or BTC if desired) which is adjustable for over every period.

Funny enough, the IMF agrees that gold is the ideal reserve asset. But there’s no getting around it, XDR is quite stable in the short-term. And the IMF adjusts the basket every 5 years.

---

Nothing decided yet

It’s an evolving process. What matters in the end is that the best solution is used. Further analysis needs to be done, but it’s a promising direction.

... btw .. any major or minor currency can be added via governance

There was also a discussion of a symbol change for Aurei for various reasons; overall some great discussion in that group! Sorry for the long post; hope everyone is well :drinks:

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38 minutes ago, CountZerpula said:

So .... a lengthy discussion around Aurei pegged to gold and the potential for F-Stablecoins.

I've read through some of the discussion on Telegram. I like the idea too. Matt says a few times that his focus is long term stability, and there is nothing longer term than gold. I also believe that the US dollar is waning in power and value, and moving away from it is desirable. The gold market is manipulated just like any other, but as he says gold can't be changed. There is a supply and you can't make more of it. 

As a fun aside, this would make AUREI literally digital gold....... Man, Flare and its associated projects are gonna **** soooooooo many people off! Time to go long on salt futures. 

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  • 3 weeks later...

For those following along with Trustline/Probity

Matt, from Probity Discord earlier today

Quote

The DAO has two components: the on-chain smart contracts that autonomously run on Flare and collect fees, and the people who hold TCN and are decentralized across may geographies.

The DAO has a legal entity (LLC) based in Wyoming, USA. Members can join during a rolling registration period and pay for the cost of admission. The purpose of the legal entity is to allow disbursements of profits collected and held by the DAO smart contracts in a legal manner, as well as providing well-defined adjudication in case of dispute. US LLCs are international member-friendly. The entity ties your personal identity to your crypto address containing your TCN holdings. Everyone in the entity will have their crypto address added to a smart contract whitelist for disbursements. The disbursements are in proportion to each individual's TCN balance. The frequency of disbursements are determined by governance.

Governance takes place through an online forum. Anyone will be able to make proposals and if it meets a threshold for attention it is eligible for a DAO vote. Votes are cast by staking TCN. TCN can be delegated to any other address. Members can pool together their votes in a proxy contract. Users can delegate their vote to these collective pools as well.

When a vote passes, there is an implementation period. Certain members may be elected to execute oversight and/or administration of the implementation. If they fail to meet their obligations, or if there is any dispute, the legal entity ensures that there is recourse in the physical world. Some votes may be to simply update system parameters like collateralization ratios, where as other votes might be larger initiatives like a new stablecoin design, integration with another protocol, or other business idea initiative.

 

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  • 1 month later...
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