your stability ranking is bonkers. What is more important to a stable coin than available liquidity to be able to spend or buy said stable at $1 of value?
A stablecoin can be more than a medium of exchange. It can be a store of value too. Pick your use case, pick your stablecoin.
But the core component of what money is and why its such a key part of our lives is not because its a store of value or MOE/UOA (we could use gold or shells doesn’t matter). Money is powerful because its expected to be redeemable at par on demand for its explict value. I think a lot of the issues people raise with RAI and LUSD is not that they are debt instruments with a soft peg, but rather their poor function as money because of the par issues.
Are you actually claiming that buying a "stablecoin" at $1.03 when you needed to "store value" then having to sell it at $1.00 to use your value is the 2nd best stablecoin for storing value in the industry?
I’m not, we’re going to add that clarification that it should be bought when at 1. It was a miss on my part for sure to not include that in the first place.
You will add clarification, but not downgrade it? #2 stablecoin is not stable, but that is OK if you buy it when its actually at 1?
So the idea is that people should buy LUSD when it is exactly $1 and wait out the volatility and sell when it is back at $1? I'm not trying to be difficult here but my point is if you want to store $10,000 of value, you're not trying to store $11,000 of value or $9,000 of value. You're trying to store exactly $10,000. To say that above peg price is less bad than below peg makes no sense because while above peg is good for people holding already, above peg is equally bad for people trying to get in. It just seems really unorthodox of a view for a stablecoin rating system.
Are you saying you wouldn’t hold a savings instrument that offered slight upside without incremental risk? If you bought at $1, you always have the option to redeem it at ~1 net of fees, where’s the question of waiting out volatility?
Not that im advocating holding LUSD for potential upside, before anyone takes this out of context
I would definitely hold it yes. But what I'm saying is that while it is good for ME since I hold LUSD it is equally BAD for someone that is trying to buy it now while the LUSD is above peg knowing that it will go down likely. I'm trying to make it clear to you guys that pegs are just arbitrary reference points. The volatility around that arbitrary point (both up and down equally) is what's most important.
You’re 100% right about it being bad for someone who didn’t buy it at $1. I’ve said that will be highlighted. Volatility is being measured btw. Pegs are not arbitrary reference points for an asset backed token. If you’re saying FRAX is pegged to 1.01, I will give you a high score if you have at least 1.01 (significantly more if using volatile collateral) in assets backing each FRAX. If FRAX is trading below 1.01, that will have an impact on your stability score, but only slightly. What largely drives high scores is whether a coin is adequately backed and has a widely accessible redemption mechanism. Perhaps you will agree that for all LUSD bought at $1, the rating makes sense? Or at least the issues you pointed out not relevant?
If FRAX is trading slightly* below 1.01
To be clear, my main issue is not LUSD. I like it as a protocol for what it is. My main issue is that the stability score makes this many assumptions. But while we are on the topic of "asset backing" and "redemption mechanism" what exactly is Bluechip's definition of "redemption?"
For fiat coins, its whether redemption is available to all users (subject to having a KYC account) or only to some (e.g Tether needs a minimum size of $100k ) For on-chain stablecoins, can the holder redeem for underlying collateral at will?
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