- “Stablecoin” pegged as closely to $1 as possible
- An asset used to trade “futures and market sentiment”
I created this temp check poll as a way to try and judge/understand how users view IUSD and where exactly we would like to take it moving into the future.
Is a depeg up or down a major issue that we should consistently monitor and address
Is the depeg “apart of the game” and should be used as an instrument to determine market sentiment and where ada is heading?
I want iUSD to be as close to $1 as possible. Well, atleast I want plenty of mechanisms to get the iAssets to peg and not just forced liquidation by increasing MCR every now and then.
An iAsset won’t have any use outside Indigo if it can’t keep its peg close to the original. I won’t be using it anywhere else apart from the Stability Pool to farm Indy.
Well originally it was marketed as a stablecoin that will keep its peg, but the market data indicates people prefer to trade this more like a futures derivative for usd. Ive adjusted my approach to th token behaving more as a usd future and actually like the utility that comes with it that no other stablecoin on ada currently can provide. There are plenty of stablecoin options now on ada that are hard pegged and more on the way. Indy’s iusd in its current state provides unique defi oppprtunities, and im okay with a depeg. I suspect its biggest depeg down will be at market transitions like we are seeing currently from bear to bull. And likewise its biggest upward depeg likely comes at the tramsition from bull to bear market. I think this unique volatile stablecoin atribute is what has made it quite popular and indy the highest tvl on cardano. Im not a fan of major changes when your protocol is winning. I say embrace it along with the wild swings we may see.
Furthermore ibtc, ieth are also trading like future contracts. We have seen depegs of 10% to -10% on both of those but it seems people are fine with that. Let’s keep the parameters that the people in the ecosystem seem to love based on useage.
Given that it’s a synthetic asset backed by another asset, but it is not redeemable on the open market for the pegged value – why does anyone in their right mind think it MUST hold it’s exact pegged value or it is somehow broken? The loss of value is the market sentiment alone and not a lack of trust in the protocol in any way. The asset is still overcollateralized on the protocol and holds at least the value of the iUSD oracle price. Since when did holding the peg become a requirement. If this was a requirement, then INDY should allow open market redemption for a small fee, which is paid to the stability pools.
If you want to change INDY’s roadmap for V2 go for it, but don’t do it after tons of people have opened CDPs and used their collateral elsewhere. Just because you (any hypothetical user) thought iUSD was a guaranteed pegged asset, but you realize it’s not one in a bull market because no one wants USD pegged assets that aren’t going up in a bull market, does not mean the asset is broken in any way. The second this community becomes full of central banker know-it-alls who think they should control the market dynamics by tuning interest rates, I’m outa here with my funds.
Also next time make sure to put in big bold text on the open a CDP page “The MCR is a variable interest rate, which can change to ANY amount at ANY time, with virtually no notice”. Watch anyone with real money run away with such a disclaimer present.
To me it’s a matter of which will encourage mass adaption with an abundance of use cases.
A high risk speculative play on a quasi dollar futures contract is not it.
This only serves the savvy degen. A very niche market imo compared to what’s possible.
Even if we decide that every other iAsset should be peg agnostic and at the mercy of the free market, iUSD “is” intended to be the protocols “stablecoin” and with that the industry standard of incentivizing peg stability however necessary to retain user confidence is expected.
My confidence in iUSD is based on if Indigo protocol holds the assets in a smart contract that cover the oracle value of iUSD, nothing more. If some whale wants to pump or tank the iUSD market price on a dex, that has literally zero correlation with my confidence in iUSD. All stablecoins trade off their peg in highly volatile markets…this doesn’t mean they are broken.
You mentioned mass adoption – how about making all iUSD redeemable through INDY as a better proposal? The 100% factual reason that iUSD will never hold its peg is because you can’t redeem it for anything, for now. You can actually redeem tether, BUSD, USDC, etc. and thus when the market prices them under $1 USD, people buy it up and arbitrage. If you could redeem iUSD for a small fee, that comes out of the stability pools, it would instantly fix the peg to whatever the % that fee is to redeem it. Think about it logically – if someone is selling special $1 bills for 90 cents, and you can actually cash those special bills in at the bank, you’d buy them all day for 90 cents, go to the bank, take out the full dollar, rinse and repeat. If you can’t cash those “special bills” in at the bank, then it’s not going to hold the 1:1 pegged value of the bill, since it’s not redeemable 100% of the time.
I will also add, when we were in an extreme bear market sentiment, when ADA floated around 24 cents recently, iUSD was trading higher than its peg. Was anyone running for the streets screaming foul play? What about all the users who wanted to purchase iUSD for a “fair market price” and they couldn’t when ADA was flash crashing? Did you all change the policy back then? Course not. If you can’t handle the blade cutting both ways, then it shows your solution or policy is biased and broken.
Last note, you are trading an open asset on an open market. The value is never guaranteed, because a guarantee means there is always a buyer or a seller, and there isn’t.
IMO regardless of the community sentiment, if the synthetic assets don’t track the underlying asset closely then I think Indigo will eventually be replaced by something that does.
There are many examples of overcollateralized stablecoins that very tightly track the peg in other ecosystems.
Without tracking the peg closely it means the synthetic assets can’t be used in a composable way that relies on price parity.
And sending the message that Indigo is okay with depegs is likely to close the door to new opportunities. The recent Liqwid use case would never have happened if this was the attitude, for example.
Consider just a few of the B2B use cases for a stablecoin.
Cross-Border Payments: Stablecoins can facilitate fast and low-cost cross-border transactions between businesses, eliminating the need for traditional intermediaries like banks. They provide a stable and predictable medium of exchange, reducing the volatility and associated risks of traditional cryptocurrencies.
Supply Chain Financing: Stablecoins can be utilized to streamline supply chain financing by providing a reliable and efficient means of payment between suppliers, manufacturers, and distributors. With stablecoins, companies can settle payments quickly and securely, enhancing transparency and reducing the need for intermediaries.
Smart Contracts and Escrow Services: Stablecoins can be integrated into smart contracts and used as a medium of exchange within these contracts. This enables automated and self-executing B2B agreements, where stablecoins are held in escrow until predefined conditions are met, providing assurance and security to all parties involved.
Remittances and Payroll: Stablecoins can be used for efficient and cost-effective remittances and payroll solutions, particularly in regions with limited access to banking services. Businesses can use stablecoins to send payments to employees or contractors globally, bypassing traditional financial intermediaries and reducing transaction costs.
If a stablecoin is not stable, reliable, and predictable then it’s not a stablecoin is it. If iUSD isn’t a stablecoin then it will never see any significant level of adoption. So what are we really doing here. Are we going to abandon the bigger picture because a few individuals thrive on uncertainty? I know its hard but lets try to consider what’s best for the future of the protocol.
Nice poll a pretty split sentiment. Personally, I prefer iUSD to be as close to $1 as possible give or take a few but it does seem the market has used the token a bit differently so far. It’s great that we are at this convo, protocol is growing and by this vote it’s almost exactly 50/50. V2 is coming soon but most likely won’t be live until March 2024 after a 6 week audit beforehand so it’s going to be a while on any sort of redemption mechanism.
I don’t think it is that nice of a poll: There is at least 4 different questions in it and 2 ways to answer whatever the reader understands is the question…
- What do you think is iUSD now?
- What do you want it to be in the future?
- Is the Peg a mayor issue or isnt? (now or in the future?)
- Does it need to be monitored and adressed?
I think the intention is more to have a conversation than sampling the poll it self…
When Cardano has several stable coins a iUSD working as a futures contract might be advantageous, so I agree with that sentiment.
More importantly, I agree with the sentiment of not changing MCR mid way due to cold feet. A well designed protocol should be able to stand the market tests in both bear and bull. Clarity and consistency in function and communication will be a win for Indigo in the long run.
there are alot of ways to fix the peg. iusd can be more liquid and stable if used across more protocols, dex’s, borrowing, lending. and even creating certain options contracts on it.
if one day it can be replaced then that seems fair. no one signed up for 190% collateral ratio + ongoing interests. but we also didnt sign up for a depeg.
if the indy holder’s trend is to create more fees and squeeze cdp owners then we need to balance the incentive accordingly. for example if we are going to start charging interest. then we should offer a way to get the interest reduced, perhaps by allowing cdp owners to stake the ada to a certain pool while its being used as collateral. or providing different rates depending on the cdp owners intent for the cdp. some want to hold forever, some want a 10% return. some want to continue to mint and burn constatly
perhaps we give an incentive for cdp owners to be able to sell their cdp at a certain price if ada hits a limit. or if the iasset hits a certain limit or if the collateral ratio hits a certain %
being more flexible with the terms and giving cdp owners options will allow us to see what their intent of the cdp is.
does everyone want to hold their cdp until ADA goes to 5 and then pay if back? are they in it for a 10% total return?
The nature of the CDP could potentially be different for the owners intent.
Theres going to be a clear understanding of which indy voters have cdps and which indy owners collect off the players.
It needs to do both. The asset cannot maintain a persistent depeg without losing significant value for composability. The asset also needs to have flexibility to depeg when market sentiment shift quickly, but be pressured to return to peg over time. V2 mechanisms such as interest-based approach and premium for minting depegged asset are good tools among having a highly overcollateralized MCR that incentivizes users to buy the asset of the market and stake in stability pool to get a high premium such as +100%, as the sentiment that the price will move up quicker than liquidations occur makes it quite risky. But really, we should strive to understand what MCR will incentive the community to purchase and stake the asset before arbitrarily adjusting. Adjustments create significant friction and should not be done lightly.
It is called “iUSD”, so it should be pegged accordingly. If we want to be taken seriously within the Crypto environment, we should have a properly working stablecoin.
By the way, can anyone explain why we have such a severe depeg? To my understanding, with the over collateralization this shouldn’t be possible, so how come we keep losing more and more peg?
It needs to be a “stablecoin”. This would allow for much more confidence in the protocol and bring in much more users if the iAssets tracked there intended price outside of just Indigo.
I believe this to be true for iBTC, iETH and all future iAssets, upward and downward pegs are not good IMO. Indigo would grow much more if we could peg our iAssests much more tightly and reliably. Maybe for up depeg lower MCR and RMR to allow arbitrage on dex and down depeg raise MCR and RMR to allow arbitrage through stability pool and redemptions?
A lot of people feel they need to be billionaires. You can’t always get what you want. Iusd is simply not built this way. Bulls should always beat bears. People will always want to speculate that the asset will rise more than wanting to buy something safe. Redemption will not work unless you force people to close their position and if they didn’t want to at a discount they aren’t going to want to now.
This is why a whole host of protocol killing proposals like interest rates and insane MCRs are being proposed.
I would like to see iUSD as a stable Asset. Not highly influenced by market conditions.
I think many people see it that way. Otherwise the sudden vote for a 150% Collateral ratio on iUSD wouldn’t have made it. I was honestly shocked by this outcome. To prevent stuff like this happening again, I think it would be good to incentivice buying iUSD from the market stronger when it depegs. I don’t know how though.
To contribute to a repeg the DAO Treasury could buy iUSD when it is at a discount and deposit it in the stability pool to earn INDY (wich will also be staked) and ADA. This would also be a good low-risk play to increase the Treasury holdings long-term