Also, while we are on the topic of "correct" ways

Question

Also, while we are on the topic of "correct" ways

to report things, you do understand that all "overcollateralized" stablecoins are in actuality just 100% collateralized right? You have LUSD at 268% and DAI at 180% because that's how they market their actual collateralization but that's not the economic reality.

If someone comes to Liquity and deposits $10B worth of ETH in a trove and only mints 1 LUSD from that entire $10B of collateral, that doesn't make the LUSD collateral ratio 50,000% because the protocol never has access to that $10B ETH. LUSD as a stablecoin is not safer in any way from that $10B of collateral. The protocol's balance sheet only increased its actual asset side by $1. A $1 debt owed in 1 LUSD by the borrower. That is the objectively correct economic reality of the stablecoin's balance sheet. You do understand this right? If so, how come you guys decided to go with the marketing speak of overcollateralized stablecoin projects that might mislead users that are more traditionally financial oriented?

#cryptocurrency #english #frax

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14.07.2023

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Deathereum · Accepted Answer

Deathereum

This is a valid point, we will figure out a way to represent this better.

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14.07.2023

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Also, while we are on the topic of "correct" ways

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