I was thinking of ways to improve the price stability from iAssets in the protocol. So I thought, why don’t we create a stability pool for ADA?
How would this work?
ADA Reverse Stability Pool would not be like iAssets Stability Pools where the protocol uses for CDP liquidations. The Reverse Stability Pool would be used only by users to take profit on price instabilities by making an instant swap between any iAsset he has and the ADA from the pool. This would work because the price used for this swap is the price from iAsset’s oracle.
Why ADA holders would want to stake their ADA in the Reverse Stability Pool?
Instant swaps will pay a fee for all ADA stakers in the iAsset used for the swap. While also receiving rewards from delegation.
Why would any user use iAssets for instant swaps?
We can imagine a situation where USD price from Oracles is 1 USD = 2.7 ADA and iUSD price from MinSwap is 1 iUSD = 2.565 ADA (1 iUSD = ~0.95 USD). This means we can buy iUSD on Minswap with a discount and make an instant swap in the ADA Reverse Stability Pool on a higher price.
If there’s not ADA available in the Reverse Stability Pool for the instant swap amount the user will not be able to make the operation.
Because the idea here is to maintain price stability we may need to add measures to avoid swaps that would deplet the pool. Maybe using a dynamic fee calculated by a relation between the pool size and total iAsset supply.
This seems to be a direct and simple solution while adding more utility to Indigo Protocol.
interesting, however I don’t think one can keep their delegation in this manner.
swapping iasset against a ADA stability pool isn’t something impossible in my opinion if there is ADA contributed to the pool. However incentivising it would be difficult, since there isn’t any liquidations rewards going to the pool for long term sustainability.
Using Stability pool mechanics in reverse manner may have some merit with some dynamic rewards between its corresponding iassets stability pool.
In this suggestion, no iassets is burned and purely redistributed to ADA stakers into the pool?
That’s what it sound like to me.
Ada placed into this Reverse Stability Pool and is exchanged for any iasset that is redeemed at oracle price.
Interesting concept and I kinda dig it.
Why would someone not be able to keep their ada delegated? If the Stability Pool contract is staked, ada staking rewards could be paid out to stakekeys in the pool, no?
The delegation is possible, you can think of a Liquidity Pool from exchanges, but with only ADA.
The incentives would come from the fees, we can use the Indigo Swap Agregator to create a real world scenario:
If we set a 3% fee for the Instant Swap. ADA Stakers would receive the 3% fee while the users who make Swaps would receive 1.08% more ADA than selling in Minswap.
And yes, no iAsset is burned, it’s like doing a Swap in Minswap.
Reverse Stability Pool, I like it hahahha
I believe delegation is not a problem and the Swaps are easier to implement than the ones in Cardano dexes. I’m just not sure if we would be able to avoid batcher fees (concurrency problems), if avoidable would be a huge incentive for small swaps.
Staking in a ADA Stability Pool would make you profit from market instability while not affecting other parts from Indigo (because is just a swap feature). This could also be situational, we can set a minumum fee of 5% and people would only be able to profit with it when iUSD deppeg is >5%.
This is an interesting topic. What happens when the Reverse SP fills up with iAssets because the redemption price is better then on Dexs? Does this take liquidity away from Dexs? Does this take liquidation earnings away from the regular stability pools?
What happens when the Reverse SP fills up with iAssets because the redemption price is better then on Dexs? Does this take liquidity away from Dexs?
I can’t say the impact on Dexs will be positive or negative. Because may be positive if you think people will buy iUSD on Minswap (pay fees for the pool) to sell in the Reverse ADA Stability pool.
Does this take liquidation earnings away from the regular stability pools?
Won’t affect liquidations earnings from the current Stability Pools.
If I understood what you want to explain then reverse stability pool can be made in two ways.
- Issue an i-assets on basis of LP tokens instead of staking key where the same ADA is used for both creation of i-assets and price stability.
- Use completely new Ada in Reverse stability LP on which i-assets or any liability is not issued.
Short coming of the 1st option is that people will have to give up their staking rights and create volatility infor the collateral on which i assets are issued
And for 2nd option to incentivise new set of group other groups like stakers , Stability LP providers and Dex LP providers will have to share their Indy rewards.
Not sure yet, but it looks good.