USD++ it’s an equally weighed allocation between different stable-coins on Ethereum.
There is a variety of different stable coin on the Ethereum Network, some of those are centralized and rely on banks and custodian services, others are algorithmically managed and considered Decentralized.
Naturaturally, each project has different goals and different tradeoffs in terms of security.
Centralized solutions have historically done a good job in keeping the peg but might suffer from censorship as governments are becoming more mindful about the role of such coins.
The majority of stablecoins are currently under scrutiny by the Financial Stability Board, including popular ones as USDT, USDC, TUSD, PAX, and DAI. It’s reasonable to assume that centralized ones would be more likely to be stopped first.
Decentralized solutions might be more resilient to these issues but they are generally more complicated which presents challenges. DAI for instance, has a soft-peg to the dollar which means it sometimes trades at a premium or at a discount compared to the price of the dollar. Which has been particularly true recently as you can see in the DAI/USDC Coinbase market.
Deploy a USD Stablecoin Only Pie which holds a set of different representations of USD in the Ethereum network called USD++ deployed as a PiePool (custom Balancer).
- Users who want to hold a cash position with exposure to USD on Ethereum can do that without relying on a single system.
- No expected impermanent loss.
- USD++ would stay liquid even in the case of the underlying asset froze transfer via admin keys.
- There is not a stablecoin pool just yet in the Balancer ecosystem.
- USD++ can become a core ingredient for other pools or project in DeFi.
A proposed allocation based on trading volume.
|Token||Custodian||Initial Allocation||Total Supply||Holders||24 Hour Trading Vol|
Stablecoin Red Flags
While USDT is by far the most liquid stablecoin in the Ethereum network, it’s worth mentioning the two major pointa:
Tether’s Terms of Service is concerning the inability to withdraw USD. In the ToS there was an entry stating the company have no obligation to redeem tethers at the face value (1 tether for 1 USD). As for now, after the last update of the ToS https://tether.to/legal/) it’s been removed. Withdraw can be delayed at will although:
Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves.
USDT breaks the standard of ERC20 tokens
DAI is widely used in DeFi, it’s a great project but it has a number of challenges.
- Reliability of collateral
- Governance attacks
- Unstable Peg
- Price oracles
USDC / BUSD
Possible censorship and related issues to centralized administration.