My post about the Bonding Curve has sparked an interesting discussion about GHST’s future and a potential shutdown of our well-known stability mechanism. While this proposal is certainly related to the discussion, it is NOT a proposal to make GHST a free floating token. Let me elaborate…
For the people not super familiar with the entire MakerDAO debate, you can get a long-form summary here. In short, there is a lot of uncertainty concerning the regulation of decentralized smart contracts (Tornado Cash) and stablecoins. Since GHST is closely tied to DAI’s value, we need to monitor those developments very closely. If anything happens to DAI, our entire treasury (and GHST’s stability) is at risk.
In this proposal I want to define the potential cases of emergency and the actions the multisig currently managing the GHST Bonding Curve on Ethereum mainnet needs to take to mitigate risks. Again, as long as DAI works as intended, this proposal does not suggest messing with the Curve - that is a completely separate discussion
DAI loses dollar peg: As long as USDC backing is intact, no action needed. Signers should however set alerts for $0.95 and $0.90 to be notified of a potential depeg so they’re able to act immediately as the situation unrolls.
MakerDAO shifts away from a dollar backing: Very long-term strategic consideration, will probably take 2-3 years to unfold. No immediate action needed, more relevant for the discussion surrounding a general Curve shutdown.
This is the important one. MakerDAO contracts get blacklisted by Circle (USDC) due to regulatory reasons: Signers would have to act immediately to protect the value of GHST’s backing. I propose immediately shutting down the Curve and swapping the DAI for USDC. This ensures that we lock in some of our treasury’s value, it does however remove the main source of liquidity for GHST. To make sure GHST doesn’t enter a free fall, $5M worth of USDC should immediately be paired with $5M worth of treasury GHST in our main Quickswap pool.
Using the current numbers, this would leave us with ~$18M USDC - the majority of which should be used to buy back the paired GHST and build up a larger LP position. The initial LP position would double our current pool and buy enough time to decide on next steps.
Keep in mind that this is a very unlikely emergency scenario. We should be prepared for everything though, getting caught with our pants down could wipe out a large sum of our treasury value and put GHST in a very vulnerable position.
My personal opinion is that the introduction of USDC is not less risky than DAI, and we should understand why MAKERDAO is determined to give up 50% of USDC reserves. Maybe one day ghst will also be regarded as a security and be regulated or sanctioned by the United States, tornado will not be the last one, I think USDC is a centralized cancer
USDC absolutely carries a much smaller risk than DAI in its current state. The chances of MakerDAO contracts getting blacklisted by the US Treasury Dept. and by extension Circle are much higher than individuals / AavegotchiDAO entering their sights, even if it’s an unlikely scenario.
thanks for starting the discussion on strategic planning for the unthinkable.
Both, DAI and USDC, are not the perfect solution.
We can’t influence the dynamics behind the emergency scenarios. I would generally agree with them, given that more discussion about the exact numbers you proposed is needed.
As Aavegotchi is obviously close to Aave, I would be interested in GHO options. MZ can surely update us about the process of the ongoing audits and advise the DAO.
There is a fourth emergency event, one that has happened before and will happen again, and which precipitated this discussion to begin with, which is the severe devaluation of dollars relative to the market and the bonding curve halting upward momentum of the GHST token.
Given the risks to DAI and to the long term value of the dollar, the necessity for yield and competition with other revenue-bearing tokens, would it not make sense from an existential perspective to reevaluate the purpose of both GHST and the bonding curve? There are millions of dollars that can be used to secure GHST’s future. It would make sense to use this advantage while it is available.
Smart contract platforms are maturing, and with that brings revenue. Capping GHST’s supply and converting it into a revenue bearing token, one that is fed dividends by its staked treasury assets, in addition to generating yield from GLTR, sets it up to both support the Gotchiverse and allow GHST holders to capture revenue from the underlying system.
The funds in the bonding curve could be used to buy over 10,000 Ethereum; they could be used to buy Chainlink; these could be staked on DAO-controlled nodes or through a service. GHST would no longer be freely exchangeable into a contract but it would be backed by considerable yield, from assets that are blockchain-native. By divesting away from DAI entirely and tying blockchain-derived revenue streams into GHST, the DAO can cut the existential risk of dollarcoins, invest in the future, and tie the game’s fate to the platform on which it is built.
I also believe the value inside the bonding curve could be put to much better use and secure the future of the protocol. From a legal perspective, I want to be clear that we are not designing a dividend yielding asset. But we can design a highly functional token that leverages the utility of DeFi and the underlying value MUCH better if we have a capped token supply and solid plan for the underlying funds. Personally, I think spending it all on ETH or LINK would be a massive mistake vs investing in our own protocol, however your point that we can use those funds more efficiently is 100% valid.
Bitcoin was made to go against centralized shit of GOV
And I dont understand, why we are looking on the way of opposition of the whole crypto solutions, aka centralized stablecoins - usdt, usdc.
I’m voting for GHO, and ETH.
P.s. GHO is Aave stablecoin that is on the track to be lunched in the future.
P.s.s. DAI is not going to face any vulnerabilities in the next year from now on, so I consider “turn off the curve ASAP” as a FUD. Imho.
GHO is no different than DAI. I understand why we use stablecoins to provide liquidity, but let’s touch grass: eventually, we start using ETH or truly decentralized low-volatile ETH-backed coins like RAI or LUSD. It’s only a matter of time.
If this proposal passes what is the biggest risk during the process of temporary shutting down the Curve. WIll this risk be possibly higher than the risk of doing nothing with what is currently in place. From what I see, USDC carries similar risk as Dai, perhaps not as much as Dai.
I’m hopeful that GHO, Aave’s incoming stablecoin, will help answer the need for stablecoins. Aavegotchi isn’t a stablecoin project and we don’t and can’t attract the collateral necessary to have one. But daddy Aave will deliver.
Hey frens just seing this very interesting discussion and wondering if anyone has already suggested using the multicollateral capabilities of the Token Bonding Curve? If I’m not mistaken, we’re using the Aragon’s fundraising contract that supports having, for example, both DAI and USDC at the same time, and that could extend to many other tokens like for example a combination of stablecoin, wBTC, Ethereum, etc… Of course that will bring many arbitrage opportunities as the price of the collaterals moves up & down, and reduce the stability of our dear GHST token, but it could also bring new growth opportunities and reduce risks as the one exposed in this thread.
Not suggesting anything in particular, just sharing so everyone is also aware of this possibility and may open any further related discussions