[CHI] - Chi Gastoken Collateral Onboarding Application

CHI token has low marketcap so won’t be very helpful at minting DAI

and frankly, it will be a disaster if it got into a very high market cap because chi tokens set the lower border of ethereum gas price, so the higher the chi price the higher the lower limit for gas prices can go… and a higher market cap means it will be difficult to push the gas prices lower by minting new chi which means we are going to artificially stuck with high gas fees for ever

chi token is hurting ethereum a lot and we should not support its adoption

It works both ways; the long-term safeLow sets the CHI price.

Only the CHI in AMMs resists downward drops. If CHI were collateralizing DAI, CHI would be liquidated upon a significant enough drop, which would lower the minimum price faster than AMM mintselling.

“Nothing can stop that now” - Anakin Skywalker https://www.youtube.com/watch?v=fFp0Cz9NxyY
It’s not “artificial”, as described in the OP. There is real demand for gas tokens under network congestion because they increase the effective block size. CHI means higher lows and lower highs, and gas price stability is a good thing.

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CHI ($2.046m) has overtaken GST2 ($1.703m) in market cap but not yet supply.

CHI AMM liquidity has doubled in the last week.

CHI AMM liquidity: 255064 CHI
220508 in Mooniswap
34641 in UniswapV2
15 in UniswapV1

Intuitively, it feels like gas tokens are one of the safest possible collateral for maker protocol. I am trying to imagine a scenario where the gas token price would suddenly collapse, but i just don’t see it.
Anyone can provide one?

Therefore the only argument against it, is governance/maintenance cost vs (small) amount of potential dai generated.

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well… the price is extremely volatile… so I wouldn’t exactly call it a safe collateral… it’s sorta like the VIX for crypto…

Yeah, i should be more precise. I meant gas tokens have intrinsic value (maybe analogy would be oil -> there is insatiable demand for energy. It’s very similar with (decentralized) computing.). Price can’t really fall very quickly to 0 (unless ethereum network suddenly stops working). Oil can’t really go to 0.

Price can be volatile, I am not sure if i would say it’s “extremely” volatile. I guess danger would be that during very high gas spike, somebody would open Vault, mint dai and left collateral. On the other hand, wouldn’t some shorting mechanism be able to dampen price spikes?

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Well, oil went negative this year :sweat_smile:
But, no I get what you’re saying and I agree with you, it would be extremely unlikely for chi gas token to go to zero as long as ethereum is still a platform of choice.

The reason I said extremely volatile is that in the last month or so the price went from about $0.50 to about $4, then fell back below $1. This is significantly more volatile than large cap cryptocurrencies like ethereum, and even significantly more volatile than many small caps. That said chi gas token is a very very small cap token, and a good portion of this volatility could just come from its low market cap.

Yeah, initial volatility was really big. But i am not so certain it’s very easily repeatable, since at that time, safeLow jumped from, and i am making up numbers, from something like 5-10 gwei to 50 gwei in a very short time. Defi craze would probably need nonlinearly jump to 10s of billions $ (in a short time) that we would get to 250-300 sustained safe low. Seems not very probable? :thinking:

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I’d wager the initial CHI price volatility was caused by threads such as this one: https://www.reddit.com/r/CryptoMoonShots/comments/hh40ip/chi_gas_token_the_easiest_5x_youll_ever_make_50k/

Very soon people realized that it is not the 1Inch token they were looking for and that the supply is not limited by design, so the price collapsed to more reasonable levels.

Long-term the price should in theory stabilize around the two fundamentals: the price of gas in ETH and the price ETH in USD, with probably a discount because actually using CHI is a bit of a hassle. However, this has not happened yet, and there is no guarantee that it will. At the time of writing this, CHI is traded at $1.18 yet it contains nearly $2 worth of gas. A few hours ago it was over $3 and the price was falling.

In this case the natural ceiling has not been reached as it would now still cost more to mint CHI than the AMM price.

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Yep. Reddit and 4chan were pumping chi.

Chi is not a good idea for collateral imo. Against.

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I am for adding chi gastoken eventually, especially because it’s price action properties are so unique…
However at current market cap and liquidity levels I don’t think it’s worth adding just yet. Also… what happens when eth 2.0 finally is released and the chain uses PoS? Does chi gas token still work at that point, or does it become completely deprecated?

yes, PoS doesn’t affect the evm, only consensus

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That did not happen; I would know. You can verify on Coingecko.

There is no natural ceiling.

Perhaps 99% of the time it costs more to mint CHI than the AMM price. Otherwise there would be profitable AMM mintselling arbitrage.

That is normal because CHI is under-utilized.

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I’ve found this interesting discussion (Phil):

@wjmelements

you forgot to post:
“CHI market cap has surpassed $3m”

I’d hesitate to make that call on a narrow top; could drop back down. Currently CHI is trading at a 20% premium vs GST2 which is slightly irrational.

I want to alert folks that the CHI gastoken was mentioned on the Friday Sep 4 Ethereum developers call. There is suspicion that CHI is a contributor to the dramatic increase in gas price. One possible solution that was mentioned was to discontinue the gas refund. Of course this would render the token worthless.

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Any timeline on this?

In the call, the accusation that CHI is responsible for higher gas prices is retracted at the very beginning of the video, and there is no further discussion on the topic.

Definitely not in Berlin.

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Yeah, I don’t think there was much CHI minting going on. And CHI could be burnt to allow for more transaction capacity.

High gas fees were due to insane returns on yield farming. Lots of transactions and people were making so much money they were okay paying the high gas fees.

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CHI overtook GST2 in supply. There is now over 3m CHI, and almost 5m total gas tokens.

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