I would like to see the addition of iGold and iSilver as assets. As much as everyone is interested in dollar backed stable coins, it is important to remember that fiat currencies are inflationary, far more so than most are wiling to admit.
Despite the official inflation rate of ~8%, which is already high, real dollar inflation is estimated to be as high as ~17% and counting. As governments are certain to continue to print, there is no credible reason to believe this trend will abate. That the dollar has lost 99% of its purchasing power over the last century is par for the course. It is a historical fact that all fiat currencies ultimately go to zero.
Gold and silver, on the other hand, have an extensive history and have withstood the most unstable economic conditions for millennia. With their proven track record against monetary debasement, monetary metals provide shelter in uncertain times.
All assets are best kept in possession in terms of security. The general rule is that if you don’t hold it, it doesn’t exist. This sentiment is often encapsulated in crypto circles by the adage, “Not your keys, not your coins”. The same is true for dollars, gold, silver, etc.
But in the same way that we understand the usefulness of having a digital asset pegged to the price of dollars, euros, yen, yuan, etc., having a digital asset pegged to the price of gold and silver is useful for the same reason. Stable coins are often used to mitigate the impact of volatility. Since crypto fluctuates wildly against fiat, stables allow people to exit their positions without exiting the market entirely. In an inflationary environment (like the one we’re in now), gold and silver are more stable and resilient than any fiat currency could ever dream to be. Thus, the advantage of having a token pegged to gold and silver is self-evident.
The idea of tokenized precious metals isn’t novel. In fact, most silver and gold is traded on the “paper market”, a pernicious instrument exploited to artificially suppress the value of metals against the dollar. (A discussion for another time).
But to put it simply, in an environment where fiat money is losing purchasing power, stable coins pegged to them will lose purchasing power to a degree that assets pegged to gold and silver will not.
He is correct. The change in purchasing power with the dollar or any currency is horrible. Creating an I asset for precious metals can show value. Especially like copper that has increased value over time due to use. Also a good stable escape away from USD. Over time those holding igold may create more value then those holding iusd. Meaning if USD ever crashes hard you can escape to igold that will help people through a change in currency. I like this idea. Also Platinum will be a good one due to industrial usage. For example in the past they used silver for quarters. As silver went up in price they had to stop putting it into quarters and replaced it with other cheaper metals.
Synthetic versions of Gold and Silver would certainly have some demand. We already have centralised Gold token in the form of PAXG… But as an investmen, Gold havn’t moved much in last decade or so. And if the narrative is as an alternate to stable coins then Gold and silver are still somewhat volatile and have been going down this year along with rest of the market. So it would be interesting to see how many people would be interested in it… But good idea nonetheless.
This discussion is important: it is one thing to have oracle-based pricing, such as a price index. It’s another thing to have a synthetic backed by real assets like gold/silver rather than a certificate of ownership. It seems to me that MELD had this proposal of real assets in partnership with Indigo. I don’t like stable 100% algorithmic, but a synthetic stabilized with a real asset guarantees a peg. I would like to hear more from Indigo on this.
That does not sound stable but rather highly speculative and will bring unpredictable imbalance . For one , the idea should be to create something much more stable than fiat markets, yet you wish to create a mechanism to mimic that and out of thin air. Forgive me I do not see the difference between that and creating iAsset pegged to the rotation of the sun relative to mars.
Good shot at this buddy. I’m not sure i entirely understand your argument for having those assets on Indigo anyway.
As for fiat, arguably they are all debts that are mostly settled through inflation. I agree entirely on that. My only question is how it relates to your proposal and do we really have a market for those options currently in the ecosystem?
Whether it is as effective as possible really isn’t the question.
No doubt about it, paper markets are a problem, but physical delivery is reaching historic rates as inflation increases and people seek financial refuge. Sooner or later, the paper markets will be exposed as fraudulent. In the meantime, silver/gold still aren’t inflating at 17% annual as is the dollar while the other fiat currencies are crashing even faster. No matter what happens, gold and silver will always have value and always be sounder than government money. This is precisely why they bother to engage in price suppression in the first place. If gold/silver were allowed free market price discovery, everyone in their right mind would be dumping dollars for metals as if running from a burning building.
To reiterate, we should dispell ourselves of the notion that dollar backed stables are safe instruments. They are not stable and they’re not safe. By every measure, they’re being inflated into oblivion. In the meantime, it is only logical to have a defense against monetary depreciation. Stable coins pegged to fiat dollars do not provide security against inflation. Those holding iUSD or Djed (or any $ backed stable) as the dollar collapses are going to get rekt. Gold and silver have historically proven sound protection toward this end.
Even now, with paper market manipulation, they still resist inflation better than any fiat currency possibly could over the long term. This won’t change. And should we find ourselves in truly hyperinflationary territory, the value of gold/silver will skyrocket against fiat currencies. This is actually one downside I can see to this proposal in the short term.
Contrary to the perspective of many cryptocurrency aficionados, crypto is a very niche market in comparison to precious metals. Gold alone is valued at ~$12 trillion even with artificial price suppression. By the time hyperinflation becomes an issue (which isn’t far off), Indigo would need to have far greater liquidity than it does currently in order to cover the inevitable skyrocketing valuation of iGold and iSilver. If we woke up with a $3000/oz gold and $60/oz silver, Indigo would not be able to maintain the peg without sufficient liquidity.
Something else I would like to add…in the line of iGold and iSylver there are those like copper, uranium, lithium those are some of the materials which will never go down in price as their scarcity is ever increasing…In my opinion it is truly trivial to guide the protocol into this direction at this point. even though its possible. I suppose what I am trying to say is that to me the Indigo protocol is useful tool to support our decentralized system by widening the market possibilities for promising projects based on their utility and volume of usage.
I agree with @Gugoplexo here that this deserves more attention by the community and the Indigo team to get all the detailed facts on the table and (I’m assuming) send it off to a temp check. From a pure marketing stand point, being able to jump on social media and state that Indigo has i(insert precious metal) would certainly get the attention of more traditional traders.
I fully agree with the thesis. There needs to be a store of value in the physical world where people can safely look. It is possible that some fiat currencies will be backed by gold (ruble, etc.). Perhaps one step would be to use part of Indigo’s treasure to buy metal in the market, minting the respective synthetic to flow in the crypto market. These are ideas for discussion. We need to move towards a v.2 protocol that shows us a way out of a supposed world reset.
This is actually exactly what i was hoping for when i first heard about indigo and synthetics in general. Being able to get easy access to the precious metal markets. I am completely on board with this suggestion.
A custodian would have to be appointed and paid a % to actually hold the physical assets in Trust on behalf of the protocol. This is an excellent idea, but this requirement would be needed which will also require the ability to pay said custodian in fiat. A significant Liquidity Pool would need to be pledged upfront to enable real-time trading of these assets with actual real-world backing.
no physical assets needed, this is what oracles are for. I think precious metal iassets would benefit Indigo users, but I also think we need more users and tvl for stable prices of iassets. So maybe in a few years or so would be a better time.