is it possible to synthesize multiple assets with one iAsset. i.e. a basket of assets, like the top 10 of cryptos? Or a basket of different commodities? Without an existing index reflecting the value?
This would allow us to create a true stablecoin called Terra, Screenshot from Wikipedia-site attached
Woah! What an interesting idea! It would be cool to see something like this!
Oh this is going to lead me down a wikipedia/history rabbit hole.
I would think the idea of bundling a group of assets as one would be something that Indigo is design to do and should.
I love that you like the idea. Let’s do some brainstorming to find benefits, downsides, possible difficulties and so on.
If we want to create an iAsset with multiple assets underlying, we have to decide how to define the share of each asset.
Depending on the design of the basket, there is the problem of rebalancing. This Problem occures whenever we have price dependent values for each asset in the basket. E.g. 50% of good A and 50% of good B. If good A’s value is rising relative to good B, ratio would change to something like 60% A and 40% B in the basker. This would lead to the need of rebalancing on a regular basis.
However there are different possible solution to this. I want to highlight one possible solution here. It is important that shares are not defined due to the value of the products on a certain day, as mentioned in the example above. So we need a basket which assets aren’t weighted due to their value. One possible solution is to work with fixed units of measures, independent of values.
E.g. 50 Gramms of Good A and 1 liter of good B. No matter how the values of the underlying assets changes there is always the same amount in fixed units of measures included in the basked and there is no need for rebalancing.
This is something we’ve thought about a lot internally. There’s a lot of potential creating a basket of synthetic assets. Especially when it comes to forming new non-fiat based stablecoins.
This isn’t something that’ll likely be supported within Indigo Protocol itself. Likely another protocol will be built on top that can bundle together iAssets. Or we’ll partner with an existing protocol that bundles assets and add support for iAssets. We have in mind a few partnership opportunities and we’ll keep the community updated if we form anything official.
I posted this in the Discord but I’ll post it again here for visbility.
There are futures markets for soy, pork bellies and frozen orange juice. These are three asset classes that could potentially be bundled together to form a hedge against inflation.
Create iSOY, iPORK and iORANGE.
Take these three iAssets and put them into a DEX balanced pool to earn yield. Send the LP tokens you receive into Indigo to stake. You now have a double yield interest bearing stable savings account that’s inflation proof. You’ll never bother with a low yield bank savings account ever again.
So, does this mean that there could be a true stablecoin based on an iAsset in future?
Yes. Indigo will likely be launching with synthethic stablecoins. In the future we’ll refine our ideas to create stablecoins that aren’t pegged to traditional currencies.
This is blowing my mind with all the possible options we have with iAssets to address so many different markets, this could be big!
Intresting idea !
But where do you see the benefit of a synthetic stablecoins in comparison with a native stablecoin like Djed ?
May be I dont just see it and there is a good reason why a synthetic stablecoins is good idea.
Good point, probably defiroose can highlight some pros and cons. From a technical point of view the two (iAssets and Djed) work pretty similar like mentioned here:
Djed is a synthetics protocol too. They just happen to have one synthetic asset, whereas Indigo will have multiple. Indigo is partnered with COTI and we’re keeping an eye on Djed’s new synthetics algorithm. If Djed proves the technology is viable we can consider using this technology within Indigo.
Alright, then I got it wrong. Thank you for clarification. Then of course I see the benefits of a new synthetic stablecoin and I am thrilled to see the iAssets on the blockchain some day.
Thank for your response!
I really like how you and the team is interacting with the community.
Thanks for clarifying!
This and many other innovations, we will see in the near Future.
Every price is measured in Fiat currencies that is why we call the coins pegged to them as stable coins. But if it is pegged to other assets like say top 10 cryptos then it can’t be called stable coin. imo
No if it is pegged to crypto it probably can’t be called stable. But pegging it to raw materials or a basket of goods of daily consum, would fulfill the definition of stable. That’s why I mentioned Terra above.
Great post. Need to study more about these iassets
This area is very exciting. The possibilities around bundled synth assets are extremely vast. I am soo stoked for what this could do for the protocol and the entire financial industry.
Soo much opportunity, it’s incredible really!
