The first thing I want to say is that I’m not trying to spread FUD here, all I want is to stir up discussion.
I believe discussion is the only thing that will move us forward, security, decentralization and antifragility are what we should care about.
In this post, I will very often refer to SILK - Stablecoin Trillema …
The mission of decentralized stablecoins should be to create an antifragile system, one that is resistant to the decisions of the governing authorities, if it were not so we could use centralized stablecoins that have multiply better properties in other aspects.
For hybrid stablecoins like DAI or USDX that are/were partially collateralized by other stablecoins ( DAI → USDC ) ( USDX → UST ) we could see a correlation with the collateral drop
In the first few years we have been promised a maximum of 50% collateralisation in centralized stablecoins ( I think even that is too much, but I would be ok to accept it )
The reality is that as of today more than 70% of SILK borrowings are collateralized by centralized stablecoins.
Only number that is below 50 is the percentage of collateral, but this does not play such a crucial role, collateral can be uploaded even without a loan
If government or any other entity came in now they would be able to send the collateral for 70% of the loans to 0 ( have fun with liquidations )
Why did this happen?
Max loans are shifted once and in bulk, instead of being shifted dynamically
This causes loans to pile up around a few assets in between what others are not at their limit
Max TVL for decentralized coins is 45%
LIKE WTF?! This is a fucking joke ( sorry for vulgar words )
I think there is no doubt that SILK is more centralized than decentralized, I might even say that it is a wrapped USDC with one difference and that is the price
here is my proposed solution:
( this is the exact thing I want to discuss, I don’t have a patent on the right solutions )
Temporary suspension of SILK issuance against USDC and USDT
Change in contract ( if possible ) so that no more than 50% of SILK can be issued against centralized coins
Creation of additional vaults ( only for decentralised assets ) with a higher Max TVL, for example 75% ( possibly the interest on this vault can be increased )
Let’s discuss !