Fixing the par value of the stablecoins

I wrote an article following my comment on the FEI PSM proposal.

In short, it’s about setting tin/tout of the PSM to 0% (at least one) in order to achieve a 1:1 peg. From there, other stablecoin protocols will be able to provide a PSM-like facility to get this 1:1 feature as well (without having to deal with centralized stablecoins directly).

By hoarding DAI to help their liquidity and peg, we obviously get more capital to work with. I reckon this is not super helpful now as we have 60% of stablecoins already, but I’m confident this will not last long.

The aim is to have $1 = 1 USDC = 1 USDP = 1 DAI = 1 FEI = 1 FRAX = …I think it’s important if we want DeFi to become mainstream and it will be important for RWA as well (where 1bps lost might be too much).

What do you think?

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Your argument reminds me of the fee on flash loans/mints.