Sorry if I am asking a silly question, is there

Question

Sorry if I am asking a silly question, is there

an actual floor to the amount of USDC (i.e. CR) that is backing FRAX? I see that since inception, CR has never gone below 80%, would there be scenarioes that drive CR towards 0?

#cryptocurrency #english #frax

0

17.05.2022

23 ответов

8 просмотров

E Автор вопроса

Sam Kazemian ¤⛓️¤
No the floor is the CR. There's always that much h...

But the CR moves and is dynamic, so hence my question...

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17.05.2022

Sam Kazemian ¤⛓️¤

E
But the CR moves and is dynamic, so hence my quest...

The CR doesn't just move for fun. When it rises, more USDC is swapped in for minted FXS. So when you see the CR rise, it's not just visual. The protocol is increasing its hard assets.

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17.05.2022

E Автор вопроса

Sam Kazemian ¤⛓️¤
The CR doesn't just move for fun. When it rises, m...

Yep agreed, but during periods of expansion, the CR goes down, so question is what is the threshold for CR to hit 0

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17.05.2022

Sam Kazemian ¤⛓️¤

E
Yep agreed, but during periods of expansion, the C...

I'm not sure if anyone would want the CR to hit 0 after what happened with UST. FRAX takes a much much more conservative approach to algostables that has paid off so far with a perfect peg.

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17.05.2022

Fares G

Sam Kazemian ¤⛓️¤
The CR doesn't just move for fun. When it rises, m...

So, wrapped usdc?

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17.05.2022

Sam Kazemian ¤⛓️¤

Fares G
So, wrapped usdc?

No the USDC then gets sent to AMOs like the Curve AMO and various other places so it’s not idle and not blacklistable by Circle or regulators unless they blacklist all of Curve, Aave, or Compound.

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17.05.2022

Sergey (FckCX)

Fares G
So, wrapped usdc?

actualy wrapped usdc+usdt+dai in curve pools:D

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17.05.2022

Kmets Brennan

Sergey (FckCX)
actualy wrapped usdc+usdt+dai in curve pools:D

Yes Frax is essentially wrapped DeFi

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17.05.2022

Sergey (FckCX)

Kmets Brennan
Yes Frax is essentially wrapped DeFi

yeah But don't forget - if we had used 4pool as collateral = RIP:)

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17.05.2022

Lordwadsworth

Sam Kazemian ¤⛓️¤
I'm not sure if anyone would want the CR to hit 0 ...

Do you still personally believe a 100% CR is the best option?

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17.05.2022

Sam Kazemian ¤⛓️¤

Lordwadsworth
Do you still personally believe a 100% CR is the b...

I think we should keep it fractional CR but back the algorithmic portion with credit/loans. So basically no, not 100% CR but take the best parts of the proposal and other community ideas like @Liscivia's ideas and keep FRAX fractional like it's known to be but even more safe and resilient.

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17.05.2022

lhl will Block and Report scam dms

Sam Kazemian ¤⛓️¤
The CR doesn't just move for fun. When it rises, m...

Curious, how is the CR adjusted? Is it directly assigned by an admin to the FRAX token contract and then the PID controller works to rebalance things? I saw the curve amo has a different min_cr_ratio than the FRAX global_collateral_ratio - is it documented somewhere how the actual mechanisms for CR balancing work?

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17.05.2022

Lordwadsworth

Sam Kazemian ¤⛓️¤
I think we should keep it fractional CR but back t...

I like it! It helps keep the utility of FXS alive

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17.05.2022

Sam Kazemian ¤⛓️¤

lhl will Block and Report scam dms
Curious, how is the CR adjusted? Is it directly as...

Right now the CR is adjusted by off chain calculations of PID controller (not on chain)+msig yes. We're going to propose soon the CR be adjusted in a more smooth manner onchain with the TWAMM AMO since TWAMMs can change the FRAX supply autonomously thus easier to keep all the calculations onchain.

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17.05.2022

Lordwadsworth

Sam Kazemian ¤⛓️¤
Right now the CR is adjusted by off chain calculat...

Curious question, do you think zero knowledge oracles would benefit FRAX?

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17.05.2022

Sam Kazemian ¤⛓️¤

Lordwadsworth
Curious question, do you think zero knowledge orac...

Yes but I think the question is more about which oracles than the type tbh.

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17.05.2022

Lordwadsworth

Sam Kazemian ¤⛓️¤
Yes but I think the question is more about which o...

MINA protocol which is funded by FTX and 3 arrows is releasing them this year, something to maybe look into?

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17.05.2022

E Автор вопроса

Sam Kazemian ¤⛓️¤
Right now the CR is adjusted by off chain calculat...

Thanks

0

17.05.2022

DS

Sam Kazemian ¤⛓️¤
I think we should keep it fractional CR but back t...

What do you think of starting to build resilience with protocol owned assets? Could be small allocations that are conservatively used as collateral, allowing the CR to be lower. They’d have to be highly liquid and never be too large; for instance if we counted our cvx as collateral and it was too big, it could create unnecessary stress on the price of cvx as people expected dumping. Same way btc was hit when Luna was expected to dump it.

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17.05.2022

Liscivia

Sam Kazemian ¤⛓️¤
I think we should keep it fractional CR but back t...

Thank you 😌 he sees what I mean. Never actually though of bringing the CR to 100%

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17.05.2022

Sam Kazemian ¤⛓️¤

I agree that is a possible doomsday scenario. But I wanted to point out that Circle cannot blacklist FRAX itself in an isolated manner as we do not hold much idle USDC at all. FRAX is only affected if in this extreme case USDC decides or is forced to blacklist everything in defi forever and at once. But yes, important to consider in the long term how to remove all reliance.

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17.05.2022

cdigiola

Sam Kazemian ¤⛓️¤
I agree that is a possible doomsday scenario. But ...

btw i m new to frax and this design point is one of the things that made me buy in

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17.05.2022

Sam Kazemian ¤⛓️¤ · Accepted Answer

Sam Kazemian ¤⛓️¤

No the floor is the CR. There's always that much hard assets backing FRAX.

0

17.05.2022

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Sorry if I am asking a silly question, is there

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