eDOUGH as collateral to borrow minted stablecoins

Hi everyone. This is my 2nd post here.
So I mentioned in the #general discord channel about using eDOUGH as a collateral to borrow something.
Since eDOUGH is likely to just stay in the wallet until vesting period ends, then why not lend it to borrow something.

So the current model would be:
Deposit eDOUGH,
then,
borrow COOKIE, a native minted stablecoin.
then,
stake it into a transmuter like mode to transmute into USD++

This is relatively new concept to escrowed tokens and I’m vague on the economic incentives and also feasibility to do this.

Discussions really welcome. Hope that we can help make this idea mature.

Edit: One possible idea on post #9

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I found out about piedao through the AAVE discussion forum. Thought there was something in the works to pass a governance vote for pie tokens to be used as a collateral for borrowing given its inherent lower volatility. Not sure how advanced that is.

Some points from WaifuKollector

well not so naive if there was a treasury that can liquidate the eDOUGH (since this would need to be a closed system) and the transmuter would most likely be just alchemix when they launch their multi collateral alUSD

at least that’s how I would imagine it would work
the treasury could also be a part of the loan repayment for value creation reasons
like in case of a interest bearing treasury, a portion of the treasury yields is used to either give out dividends or pay back loans. Just like alchemix.

And if the COOKIE collateral gets liquidated by treasury, the eDOUGH is distributed evenly to other holders

ofc there needs to be safety measures in place in case of a flash crash or some malfunction. Like cap the cookie minting, 30% edough value+30% of your portion in the treasury.

1000$ in eDOUGH + 1000$ portion of the treasury would mean you can borrow 600$ for every eDOUGH you have.
Just ideas

Some point from both Alex and waifukollector

Come to think of it…
Lend out eDOUGH to borrow PIEs for longing??
Such as BCP YPIE DEFI++ etc…

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What criteria do we have here to meet to get this through?

@Crg5rMgnRZFncz9 Here is the link to the discussion on Aave forums: https://governance.aave.com/t/proposal-add-a-piedao-secondary-market/2013

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Okay summarizing what WaifuKolletor and me discussed:
Prerequisite: Dough and eDough needs to be fee-streaming/ represents a share of the treasury.

  1. Staking DOUGH and eDOUGH in a PieDAO pawn-shop contract first as collateral.

  2. Stakers are then eligible to take 30% of their total sum of staked DOUGH and eDOUGH as credit

  3. To borrow, a mint-able COOKIE is given to the borrower as debt, which is a stable-coin pegged to USD. ( Pegging Mechanism unknown)

  4. COOKIE can then be swapped within 3pool+COOKIE pool in crv.to (Let’s assume we have a COOKIE-DAI-USDT-USDC pool now).

  5. The swapped stables are then up to the borrowers to spend (lambo wen?)

  6. The rest of the collateral is then auto-re-invested into PIEs or something else so that it can be used for liquation in case of free-falling of DOUGH.

  7. During liquation the liquidated eDOUGH and DOUGH are spread among other eDOUGH and DOUGH stakers.

  8. Liquidation is done by treasury " so the edough stays inside the system and as a tradeoff for losing value from treasury other edough holders get more edough and by proxy more revenue".

  9. Mintable COOKIE are capped to the value of the treasury.

That’s basically what we have discussed.
Please feel free to provide any feedback.
Need more expertise knowledge on how do-able is this idea.
Later I may upload a diagram to show the flow of this idea.


A super nice visual summary from danner.eth
*Liquidation and distribution involves DOUGH and eDOUGH

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Suggestions for the USD-pegging of COOKIE:

  • Over-Collateralization with DOUGH
  • Fractional-Reserve with DOUGH and USD++

Hey everyone, this is Erick from Wing Finance.

For a DOUGH-backed stablecoin, I think we should use ICHI

ICHI creates oneTokens, which are $1 USD stablecoins backed by different projects’ tokens. For example, oneLINK is a stablecoin backed by LINK, oneETH is a stablecoin backed by ETH.

I think PieDAO should work with ICHI to create oneDOUGH, which would be a $1 stablecoin backed by DOUGH. Lock up DOUGH & USDC to mint oneDOUGH. It would also be very cool to see oneDOUGH in USD++.

We use ICHI for our own stablecoin, oneWING, which has WING in its treasury. So, the more oneWING minted, the more WING is locked up. This mechanism has worked great for WING holders and I think a similar one for DOUGH would work just as well.

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Or focusing on building up piedao’s strengths of developing PIEs (ETFs)?

A well balanced PIE, e.g. basket of yield bearing stable coins + growth tokens like DEFI++, ETH etc, has some crypto counter cyclical characteristics, and could be attractive as a collateral for the various lending protocols out there.

Lend out PIEs and borrow more PIEs for longing instead? Demand for PIEs will increase, and both PIE & DOUGH token holders will benefit.

But if you go down the cookie route, over-collateralization of dough is necessary. The question is at what percentage - is there sufficient liquidity for Dough to manage volatility. The more volatile Dough is, the higher the collateralization ratio up to a certain point the cost-benefit wouldn’t make sense.

Hi @ricJones_Grizzy and PieDAO - Bryan from ICHI here. @erickpinos just filled me in on your stablecoin use case and I rushed over here to check it out. I love the way you think! But you are making me a bit hungry :slight_smile: … the good news: we can get you up and running with your own stablecoin (audited by a top tier firm) in an almost self-service way. Everything you want with little/no dev effort. next steps: can you delegate a few people to join a call for a build vs. partner discussion … we have some info to share with you that isn’t public. It will matter a lot in their analysis. Thanks!

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image

Hello. I would like do a check on how do yall feel about this idea. eDOUGH be served as collateral to borrow either stablecoins or synthetic DOUGH. eDOUGH can be combined with DOUGH staking to yield DOUGH.
  • Yes
  • No

0 voters

For transparency, I voted no. Based on everything that is going on with regards to treasury mining, Yearn support, LP based pies, etc., I don’t think this is the best use of the limited resources that PieDAO has to deploy.

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I understand that treasury is limited, but under what condition should this proposal be feasible ?

I am speaking more in terms of developer resources than financial. ie: I would rather see the ambitious Q2 roadmap be completed and stabilized before adding anything this new

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Thanks for creating the forum post @ricJones_Grizzy . Personally I think it would not be wise to pursue this idea for the following reasons:

  1. DOUGH is currently not a great source of collateral due to its low market cap and shallow liquidity when compared to other assets which are used as collateral in other protocols.
  2. To me the concept of eDOUGH is that rewards are delayed and you just have to wait to do anything with it. Giving use to eDOUGH defeats this.
  3. Smart contracts are hard and costly to produce and we already have quite the backlog. Especially systems like these are complex and take a long time to develop.
  4. A stable coin would not fit within the current products PieDAO offers.
  5. I don’t see the added value of people being able to mint an illiquid stable coin with their eDOUGH.

I also don’t get what you mean by liquidated eDOUGH goes to DOUGH holders. Who is doing the liquidations? If eDOUGH is non liquid and they liquidate that, do the liquidators receive eDOUGH?

Overall I think we should focus on core PieDAO products. Do few things very well or do a lot and suck at it all. When I look at the DeFi landscape all of the major protocols have stuck to this.

:heart:

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