The Promise and the Promissory Note

Decentralized Finance and Trust

Stable Coins

The best application that decentralized finance has yet to produce is stable coins. It isn't even close. The ability to hold wealth digitally while maintaining sovereignty is hugely important. The ability to send these assets anywhere, to anyone, anytime (so long as you can afford gas) is the best thing we have walking.

However, there is a single issue with decentralized finance and that is the centralization of our best application. Tether, Circle and the new entrants for decentralized interest bearing stable coins are centralized entities. These entities are necessary for integrations with centralized finance - interactions at the grocery store and paying taxes.

However, in the world of decentralized finance, do we really need Circle & Tether at the heart of our 3 Stable Coin Curve Pools?

Solution

We have a lot of things to brag about in decentralized finance but the best thing ever is the end of informational asymmetry. All persons are able to audit the block chain, much easier thanks to block scanner app, but even without them I am sure there is a way to know what is going on.

We can audit any stable coin we want. Whenever we choose. And so that is what I chose to do today with a decentralized stable coin called Grai to bolster my confidence in the ecosystem.

Collateral For Grai (7 DEC 2023)

I looked at all the collateral on all the chains, excluding Linea. I wasn't able to locate the Gravita Activity Contract on that chain, but I will post that on Lens as soon as I do.

Some 43% of the collateral is Rocket Pool Staked Ether and 26% is Wrapped Staked Ether by Lido. There is about 7% back by wrapped ether as well.

The next question is to figure out how much collateral has been minted as a whole. This is easy because we can visit the token contract on each chain and find the Collateralization Ratio in the Stable Coin. (All Collateral / All Supply)

I found this number to be 3.08 this morning but naturally it fluctuates with the price of the collateral.

Lastly, I went to the holders tab on the block scanners and looked at activity for the token users. People definitely used the token to provide liquidity, and even to sell for USDC. Very few hold the token in their wallet doing nothing.

Final Thoughts

In decentralized finance, we have a special application and special characteristic. The special application is the stable coin and the special characteristic is the absence of informational asymmetry.

Users should aspire to take advantage of both to use more decentralized stable coins, which are more easily audited than centralized ones.

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#stable coins#defi#blockchain
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