Hi Team, I have a bit of a weird question

Question

Hi Team, I have a bit of a weird question

which has come about due to me looking into the USDD depeg issue.
They have an over collateralized stable coin but are still depegged, even though they "allegedly" have enough reserves.

I did some research and know why ,
and it generally boils down to people only paying what they think something is worth.

So for DJED what is preventing people from selling DJed for $0.98Cent and taking a small loss and there by creating a depeg even though there is enough collateral in the reserve.

I know taking a loss goes against human nature but if people get spooked and faith is lost then it could happen (see USDD).

the reserve ratio is only to maintain the burning/minting, and to give the community faith that they will get their $1 back as reserve has funds.

I know the same could happen to USDT / USDC or even the real Fed issued dollar as something is only worth what someone is willing to pay/sell for.

But if everyone decides to sell for $0.97 like in the case of USDD then depeg happens, and depeg causes a greater loss of faith and new kind of death spiral happens.

I just wondered if the team have thought of this?

Super long research thread on USDD issue posted https://t.me/COTIdiscussion/39875 incase anyone interested.

#coti #cryptocurrency #english

0

15.06.2022

5 ответов

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Zippy Zoro | Resolute Node Автор вопроса

lalatdaun Sapta
No answer from dev

I only just posted lol, plus it's a long read and a lot of the time the support team may need to get clarity on these kind of questions.

0

15.06.2022

Fireflight

My opinion on this. You will always be able to burn your Djed for exactly 1$ through the djed portal. It can always happen that the peg is different on DEXes, depending on the volumes and willingness of ppl to take a loss by selling djed cheaper then 1$, that's their choice. Same goes for USDT. USDT sometimes depegs but it has been stated that these are always redeemed 1:1 through the USDT redeem portal (but you need a minimum amount to do that, so mostly for big players I think)

0

15.06.2022

Zippy Zoro | Resolute Node Автор вопроса

Yes they kind of call out what I'm saying , It's based on "rational users". It goes out the window if faith is lost in a project, People are no longer rational and will sell for a loss. Anyway it's all theoretical , and I guess the faith would be in ADA and not in Djed/Shen. ADA seems very solid, so not going to happen. I think @CryptoFirebird does a better job than me of explaining why peg "should" be regained all things being equal https://t.me/COTInetwork/742710

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15.06.2022

HeptaSean

Zippy Zoro | Resolute Node
Yes they kind of call out what I'm saying , It's ...

Yep, he is also saying quite the same as the theorems/argumentation in the paper. And as you say, it does not mean that no “unpegged” trades are done by “irrational” people or within the margins set by the fees in secondary markets.

0

15.06.2022

lalatdaun Sapta · Accepted Answer

lalatdaun Sapta

No answer from dev

0

15.06.2022

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