Following a comment by @PaperImperium and @alexis in several other threads as well as the ridiculous rate at which the PSM is filling up, here’s an idea to start removing USDC from the PSM. I have to admit this is kind of vague at the moment because I don’t yet understand fully how our RWA vaults work but hopefully the @Real-World-Finance guys can comment about what obstacles stop us from this.
The goal would be to have a USD bank account serve as a Real World Asset with stability fees slightly set to be slightly lower than prevailing interest rates. I don’t know how hard this is to achieve but if our RWA framework is able to handle this, the account owner is then able to deposit a small amount of seed USD, generate DAI, sell it on the open market for profit and receive USD, put that USD back into the account and repeat the process as long as DAI trades above $1. I’m sure we’d have lots of people who want to take advantage of such an arbitrage opportunity with zero risk.
While this idea is still at a very early stage, the idea of replacing an additional PSM middleman entity (Circle for USDC, Binance for BUSD, etc.) is quite appealing to me. We would end up holding large amounts of USD in a bank account (or mutliple accounts) instead of stablecoins in PSMs but risk wise, most people might find this more palatable. The fact that the stability fees are nonzero also means more revenue than the one time fees we get from the PSM. And lastly, we lost the bad PR of being a “USDC wrapper”.