IMO there are three problems to doing so:
- Ideally figure out an index to track that's better than USD price
- Oracle design that's decentralized and is not capturable with a large pool of money
- Solve the problem that staking yield is competition
Tracking USD is fine short term, but imo part of the vision of nation state resilience should be independence even from that price ticker. On a 20 year timeline, well, what if it hyperinflates, even moderately?
If you don't have (2), then you have to ensure cost of capture > protocol token market cap, which in turn implies protocol value extraction > discount rate, which is quite bad for users. This is a big part of why I constantly rail against financialized governance btw: it inherently has no defense/offense asymmetry, and so high levels of extraction are the only way to be stable. And, of course, it's a big part of why I refuse to give up on DAOs entirely.
If you don't have (3), then again you have a few percent APY suboptimal return rates, which is quite bad. The possible paths to solving (3) [treat this as enumeration of the solution space, not endorsement] are basically:
(i) reduce staking yield to like 0.2%, basically hobbyist level
(ii) create a new category of staking which has yield almost as high as regular staking, but which does not have the same slashing risk
(iii) figure out how to make slashable staking compatible with usability as collateral (does it mean that slashing risk somehow passes on to stablecoin and CDP holders, so both of those need to stake and trust the same delegate?)
If you're going to try to reason through this in detail, remember that the "slashing risk" to guard against is both self-contradiction, and being on the wrong side of an inactivity leak, ie. engaging in a 51% censorship attack. In general, we think too much about the former and not enough about the latter. Also remember that a stablecoin cannot be secured with a fixed amount of ETH collateral; in the event of large drops you need to be able to handle rebalancing (though of course you could choose to partially drop this goal in a clever way, eg. if ETH price moves too much you stop earning staking yield until you take some other action)
We need better decentralized stablecoins
byu/vbuterin inethereum
Posted by vbuterin
3 Comments
I get the vision, but I think we sometimes over-theorize this.
The USD “rules” globally not because it’s perfect, but because it’s liquid, understood, and widely accepted. That makes it a very practical reference.
Any alternative index has the same problem. Gold? Its price is also influenced and financialized. A basket of goods? Who defines and updates it. Energy? Same issue.
So the problem isn’t that USD is flawed (it is), it’s that there is no neutral, manipulation-free unit of account. At least USD is tangible in everyday economic reality.
Maybe the real goal isn’t escaping USD entirely, but building systems that can survive its devaluation, rather than pretending we can anchor value to something “pure”.
These are open questions, not answers — but ignoring the practicality side feels just as risky as ignoring decentralization.
So a company must launch a stablecoin pegged to a basket of currencies. Facebook’s Libra implemented by someone else than Facebook
*If* the USD would “moderately” hyperinflate then humankind is very likely already in the process of switching to some crypto currency. That cryptocurrency (would be great if it’s ETH) will then have enough people that hold it, liquidity and mind share that it will effectively become a stable coin and people start pricing things in it.
Stablecoins are a temporary need for the transition period.