USDC/USDT have a good chance of being cucked in the very near future. Addresses can already be frozen, if a nation wants to freeze all of DeFi or deems it illegal, it could order USDC or USDT to freeze the contract addresses of Curve or Uniswap. This is a huge attack vector and it needs to be mitigated. As we have seen, to deal with this, people are making tons of decentralized stablecoins. The problem is, ALL of the popular decentralized stablecoins, DAI, MIM, FRAX etc. All contain USDC or some derivative of USDC/USDT which can be frozen. This would render that stablecoin useless. The only stablecoin I am currently aware of that has a fix for this is RAI. It has a token backing it called FLX (Think of MAKER for DAI)
Market cap is fairly low for a project of this caliber, only roughly 150 million or so FDV. Lots of integrations seem to be coming soon and a lot of people are sleeping on it. Not sure how you can be so bullish on Kleros as a board yet be missing this, it's another one of Vitalik's favorite coins.
DAI was forced to rely on USDC to partially back it after it lost its peg during the 2018-2019 bear market. It would be interesting to know how RAI plans to solve this problem DAI faced. Atm algostables have won vs overcollateralized stables but I'm not sure if such a system is sustainable during a bear market, because so much of UST is locked up in Anchor and vulnerable to a bank run if the SEC goes after DeFi after the Daniele Quadriga scandal for example
Andrew Murphy
UST is literally unbacked if all 14 billion tried to redeem together it would literally collapse the system is banking that UST demand will grow forever
Cooper Sullivan
Pretty much everyone I've heard talk about algostables seem to think they collapse eventually if they are unbacked.
RAI was actually created to solve the exact problems DAI faced after the 2020 black thursday incident where DAI lost peg.
Basically with RAI, the thinking is, to have a floating stable. It can resist inflation, you can read about it's design. It was initialized at 3.14 and has been pretty stable at 3.04 ever since. Not being pegged to the USD and not being totally stable also may allow it to escape some sanctions other stables may not be able to.
A lot of RAI's design is the original design for DAI. Pretty sound, the reason DAI has lost peg is because it doesn't have the rates and it HAS to equal $1 at all times pretty much. RAI fixes this by being allowed to float.
It has a PID controller that looks at both the redemption price and the market price and it adjusts this redemption price/rates based on this.
Parker Lopez
d0geb0nk will be stablecoin if the prophecies are true
Dominic Powell
There are many solutions to this:
LUSD, RAI, SUSD, UST
Xavier Harris
RAI is by far the best though.
sUSD needs to be over collateralized a shit ton, also its backed by SNX, which probably isn't something you'd want to hold during a black swan event.
LUSD has the exact same problem DAI has. It will lose peg during a black swan event. Already lost peg for a bit during the crash we experienced the past few weeks. It was at $1.02 for a while.
UST is a scam, it isn't fully backed. I would never want to hold it.
Basically for a stablecoin to have longevity you need to have someone willing to hold it.
This is how DAI/USDT/USDC originally came up. There was no crazy LP incentives that were being propped up by morons aping into a gov token for an unsustainable product like SPELL.
In a bear market, a stablecoin needs one thing to survive, holders. As long as someone is willing to hold it and take profits to it, this will give the coin enough activity to make it profitable for LPers to LP it for passive income.
Out of all the new stablecoins RAI is the only one that seems to offer anything that the others don't. You can't refute it. Money Skelly is right, all you really need is RAI/DAI in terms of decentralized stablecoins.
Chase Flores
Saw what happened with LUSD, a bit scary. Started building a bag of FLX after looking into solutions. Seems like RAI could be a decent stablecoin. Gonna continue to stack throughout the next few months while we remain bearish.
Liam Gonzalez
Rai is just weird Dai. Why’s it stable(ish) at $3? Strange
I welcome Rai even though it’s fringe. Let a thousand flowers bloom. Soon every protocol will issue its own stable, because why not control the money printer. We’ll look back on this era as defi dark age
There are on / off ramp stables. Some integrating with central banks and treasuries. It’s ok they can blacklist accounts. Every asset has risks. Other regulated CDP stables will function like crypto Eurodollars. Then there will be millions of decentralized fringe stables all over the place, weird ones like Rai
Alexander Gray
man shut the fuck up. DeFi isnt going anywhere.
there are projects like BitDAO already investing hundreds of millions of dollars (considering these mfs have the largest treasury in the market at $2.6 billion) in DeFi and Web3.
so tell me how the fuck is DeFi gonna “stop” when so many projects are investing in it?
Nathan Hughes
it could the default stable currency for etheruem ecosystem as a nation state if u think about it. yes there might be more coming up in the future, but RAI has first mover advantages and lots of big names behind it. $3 is simply because the devs chose to peg it with pi 3.14 at launch
Christian Nguyen
It could just be black listed by stables, who get forced to do this by the government. I'm not the only one saying this. It's a real problem.
The reason its stable at 3 is because it isn't truly priced against USD. Also, it doesn't want to be $1 because most likely all stablecoins are going to be facing regulation at some point. Harder to make an argument in this case it would seem.
DeFi really needs a reserve currency and RAI is probably the best candidate for it. Designed to be maximally resilient during bearish conditions and also maximum resilience against centralized regulations.
Tyler Reyes
bizraelis? fuck that, BIZGYPTIANS will smite those heebs from our lands
So are you saying the field is wide open for me to make my own stablecoin which believes in actual Freedom rather than controlling people? A coin that hates the kike system and won't cater to it?
Angel Carter
Very cool. I didn't know about the 3.14 target
Rai is obscure. I haven't taken the Rai pill. I will look into it more
I don't believe Defi 'needs' a 'reserve currency', whatever that is. We already have Defi and it is beautiful, even without its own reserve currency. If some new reserve currency evolves for Defi, that will be amazing to see unfold. Only time can tell
Like I said, we'll see a class of stable coins that obeys state enforced regulations. And of course we'll see stable coins go underground, it's impossible to stop and at the heart of defi ethos
This is absolutely incredible, what we are witnessing happening. Hundreds and hundreds of new currency experiments all around us, new ones born everyday. New money printers switched on everyday
Rai is technical. There isn't much memetic power there yet. When you compare to something like Magic Internet Money, you immediately see rai is a little bookish and stiff
MIM may fail, sure. Only time can tell. MIM absolutely has mimetic power, which is essential for all good monies and I assume for any so-called reserve currency as well. MIM undertands human psychology and money is mostly psychological. That's why MIM seemingly appeared out of nowhere and suddenly it's everywhwere, on all chains, dominating the defi mind space.
Of course the most imporant thing for the stable coin is to maintain target price, to earn trust and to become lindy. Defi is still brand new. We'll see
Juan Turner
> well. MIM undertands human psychology and money is mostly psychological. It’s bit of a conundrum. They were definitely adopted because of the “memetic power”, but did this adoption come in because of that power or because every protocol adopted it? Like a chicken and egg problem? The memetic power is overblown RAI doesn’t necessarily need to have that memetic power, as long as it’s technically good, devs will adopt it. Idk I’m sub 60IQ so
Thomas Bailey
How do I make money with Rai?
Carson Diaz
I was just arguing your point. I have no idea how good RAI actually is or even plan on buying the bags, but I’m assuming you need to buy Reflexer.
Luke Long
The way I see it, any new currency is full of risk. Most will crash and burn
To take a big risk, people need a big reason.
Making money is a big reason. Because it feels good to make money.
Then if you can make making money fun, like a playing a video game... it's like magic
Nicholas Nelson
>Very cool. I didn't know about the 3.14 target The target adjusts overtime based off of what minters and holders are doing. Basically has its own monetary policy to try to keep it as stable as possible without doing an unexpected break. It can go up and down a little bit. But most likely it will stay in range now. When launched there was a lot of apes involved and arbitragers who didn't know what they were doing so priced moved off target a bit more. Now I think it targets around 3.05. Not being pegged to $1 is a big advantage when it comes to regs >When you compare to something like Magic Internet Money MIM isn't a desirable stablecoin though. It is very easy to break, there is no anti-fragility from what I see. I don't know anyone who actually holds MIM. I talk to a lot of people in DeFi and most people I know only want to use MIM to farm. That is a problem. Basically the whole entire MIM/SPELL ecosystem is held up by curve. Curve itself is a bit of a ponzi. If the CRV token price goes down, it will be less appealing to LP MIM and it will likely depeg.
Like I said, bottom line is someone needs to want to hold the stablecoin. There are already DAOs that hold RAI. It is completely backed by ETH and isn't relying on some unsustainable ponzi/low quality collateral/tons of moving parts like MIM is. Arbacadabra is more of a borrowing system, and less of a stablecoin. If no one wants the stablecoin, it will depeg in a bear when you need it the most. No one will be willing to LP that garbage, because there will be zero swap fees for it, and also because CRV token price will collapse and no one will LP it because of that too during a bear.
If there is organic desire for the stablecoin itself it should probably exist. RAI is the only one of these new stablecoins where I see people wanting to hold it. No one wants to hold UST for example, they just use it to farm. None of this exists for long unless the market continues to go up forever. That seems unlikely.
