Guest: Ameen Soleimani – Reflexer Lab; RAI; Spankchain; MolochDao
Podcast: Epicenter
Got into crypto buying mushrooms on Silk Road
Lost money in Mt Gox
Worked at Consensys
Started Spankchain
Started MolochDao
Started Reflexer / RAI
Moloch gave Tornado its first grant – this issue is personal for him
Big Maker / DAI fan through 2018, 2019 – Spankchain couldn’t get bank accounts; cypherpunk money
Wanted to fork it when Maker added USDC (went multicollateral), more centralized governance (to set stability fees)
-right now it’s 20% ETH collateral, 80% USDC
-governance – vote to set interest rates (stability fee)
-DAI was first stablecoin that Ethereum could use that wasn’t volatile
-Nikolai the cofounder didn’t want to peg it, but lost political battle – pragmatists wanted dollar peg to help growth
-Black Thursday (March 2020) – ETH crashed 2x% in 24 hours, added peg stability module to allow minting of DAI for USDC
-Ameen believes USDC is Trojan horse for Ethereum – now USDC is 80%
Now there’s governance proposals to make DAI free floating
RAI is single collateral, only ETH
RAI allows negative interest rates – just changes peg price to incentivize sellers
Transparent rules based engine to stabilize itself, not dependent on peoples’ votes
RAI peg started as pi dollars ($3.14)
When loses peg, say there’s demand for RAI and it goes up 5%, the peg starts to drop at a specified rate; creates incentive for holders to sell RAI to bring the price back to peg
“Money god always wins”
If you’re trying to manipulate price of RAI, it should be expensive for you
Those who are aligned with stabilizing price of RAI stand to make money
RAI referencing dollar still makes it a dollar-denominated asset, subject to dollar strength / weakness
Big RAI price change happened in first 3 weeks – sponsored attack on own system, offered incentives to LP RAI, pumped up price 10-12%
Took 3 weeks to fix it
Rates got to -70% to adjust the RAI price back
Currently you have to pay 14% to hold RAI – so why hold it?
~$15m RAI outstanding – DxDAO was one of holders but negative rates caused them to sell
If you care about decentralization / not being blacklisted, RAI might be for you
RAI can only ever be backed by ETH – can’t change that anymore
Even stETH depends somewhat on Lido governance
A better opportunity is to make more RAI-like things – stable coins that aren’t pegged to dollar; mechanisms to stabilize themselves
RAI price started at $3.14 (pi), now it’s around $2.92
RAI isn’t mean reverting – doesn’t matter what starting point was
“Stability is in eye of beholder”
In hyperinflation scenario, RAI should be in equilibrium with rates to borrow DAI, etc
RAI’s controller response time is ~a few months
Ungovernance meme – progressively remove governance over aspects of protocol
Want to automate controller – still figuring it out
System has been in production for 1.5 years
Re: price oracles, system depends on Chainlink – which isn’t ideal
FLX – same as Maker – buyback and burn revenue model; protocol makes money from stability fee and liquidations
Stability fee is 2% – may be locked in forever – Maker uses SF as monetary policy tool, but it’s supposed to reflect price of collateral
Tornado cash OFAC sanction – USDC froze all USDC in those contracts
DAI has $6B USDC
Rune realized need to reduce exposure to USDC
Most effective knob is to reduce redemption price over time, make it progressively less attractive to mint DAI for USDC – RAI has already proven negative rates can work
He wants Maker to reclaim monetary sovereignty for DAI – doesn’t need to be pegged to USD
End game isn’t dollar-denom assets – in time crypto will have own price indexes other than fiats
USD reference for now is easy, liquid, stable
Brian — USDC is obvious target to control / regulate crypto
Vitalik article on Terra — if stablecoin can’t unwind in a down market, it’s basically a Ponzi scheme
Friederike – feels like mainly an oracle issue – main reason we don’t have real world assets – no good price feeds
Ameen – When ETH hits $75K, decentralized stable coins can scale – maybe we’re still in experiment stage, it’s a good reason why stable coins should be sub-$100M dollars
Wants to work with devs that can fork RAI and improve / change it