I’ve published the idea here. Most (all?) financial systems started with coins that weren’t swappable at par but fixed this problem as it is much better to have the same unit of account. It’s inspired by the Suffolk System which solved this problem in 1824.
It was also suggested in The case for Clean Money, which is a good TL;DR of this Signal :
Bringing the ecosystem to have a mindset of 1 DAI = $1 will take a bit of time so it’s important to start early (payment rails should be upgraded, broker-dealer so take it into account, other stablecoins protocols should join, …).
USDC is eating the on-chain volume market share and we shouldn’t stay passive.
The second step will be when our balance sheet will be fully invested (RWA, bonds, institutional vaults, plenty in the works). Then we will be able to increase the DSR. DAI will be $1 but yielding a better rate than the fiat-backed stablecoin (that can’t really compete).
Reducing the USDC is another kind of problem and making it difficult to deposit USDC in the PSM is more adding friction to DAI than anything else (people want to own DAI but we tell them to use USDC instead or to pay a premium, paying a premium to lend us capital at 0% …).
I estimate that at least $6M are spend on stablecoin swap with DAI (only for LP fees). While this is good for liquidity providers (like me), this is clearly making our customer pay for using DAI. It’s a tax on DAI adoption.
This equates to 0.1% on bank transfers. While uncommon now in TradFi (I still have one bank charging 0.15%), this shouldn’t exist at all in DeFi.
Currently, DAI is a stablecoin which value is around $1. This would anchor the perception that 1 DAI = $1. DAI would simply be a dollar with a Maker logo on it. You could swap it for free for fiat-backed stablecoin and get $1 there.
DAI not being equals to $1 is quite an issue when dealing with RWA. This would significantly improve the value proposition.
Some are going to go through Circle then pay the 20bps to DAI (PSM) to repay their loans. For 90 days invoice financing, that adds up quickly (almost 1% yearly).
The SocGen deal is about creating a repo market in DeFi. The repo market is a short-term funding solution to provide liquidity to actors that have a temporary deficit in it.
This works best if all the stablecoin are at the same price so the liquidity is merged (think of Aave when you lend/borrow any kind of “tier 1” stablecoin at the same rate). Even a few basis points is an issue as there is a lot of transactions.
When I buy a $100 product on an e-commerce website, it cost me $100 no matter the bank I’m using. A merchant will likely take USDC or USDP at face value but not DAI (with the exception of our shop).
PS: Actually, I wasn’t able to confirm what Coinbase Commerce is doing but I assume USDC is at face value while DAI is not.
Having a strong peg will force other stablecoins to fix their peg as well. They will be able to leverage DAI for that, hence lending capital to Maker at DAI interest rate (at max DSR so 1bps). Read more here.
It would be better for them to use DAI than USDC directly as it feels less centralized, less management is needed, and we provide an MKR backdrop.
So far the PSM generated 4M of profit for the protocol.
Most of those revenues are generated when we expand DAI supply (or when we introduced PSM-USDP). In a stable environment, the fees from the PSM are below 5% of revenues.
Curve is in the business of providing stablecoin swaps. We would provide a better alternative for DAI <-> USDC <-> USDP (assuming efficient markets). This might be an issue for their business model.
Such a move will be arbitraged by market makers with Curve. This might lead to increased exposure of 200M in PSM-USDC (thanks @Primoz). using 1inch to get more liquidity providers, the increase might be 250M. This should be solved by institutional vaults, RWA and, more precisely, by short-terms ETFs.
- Yes, tin/tout to 0% for all PSM
- No, leave tin/tout as it is
This signal request poll will run for the next 2 weeks, until Monday, October 25th. If a majority of forum voters (excluding abstain votes) are in favor, the proposed changes will be submitted for an on-chain governance poll the following week.