It would be interesting to hear how much work downstream for how many people a change like this might mean.
As a non-dev it seems like a simple change (code wise), but I obviously have no idea.
Are you aware that
- there is no native USDC on the Tezos blockchain.
- blockchain.com does not support Tezos native tokens
- you can’t provide liquidity on Tezos and at the same time earn interest on bc.com
- the APY for liquidity baking is currently 100% which outshines bc.com’s offer by multiples
- USDtz is backed by 100% USDC on Ethereum, and can be swapped/claimed
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While I don’t mind to prolong the tzBTC experiment for another 3 month, I would definitely like to see more liquidity and volume on the USDtz pair and would welcome USDtz liquidity baking for this or the next protocol amendment.
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@KevinMehrabi are there plans underway to get USDtz listed on a CEX? maybe that helps with pitching the idea to the masses.
@JarrodWoodard need to be careful here - USDC has simply announced, very much so how OpenSea had announced. and then they [allegedly] deprioritized tez for MATIC. i reckon i’m better off with a bird in hand now than two in the bush later. worst case, USDC does launch at the same time USDtz is liquidity baking, but that’s ok… may lead to some fragmentation, but the alternative, IMO, is way better in that we may actually get a way to clear big trades pegged to a stablecoin. best case USDC doesn’t launch for a year, but (assuming USDtz becomes part of LB) tez won’t be dependent on Circle to continue its progress. somewhere in the middle case USDtz struggles with adoption in LB, USDC doesn’t launch, but the community (to @sophia’s point) will have experienced/experimented something new on its own.
Does not make any sense in context of liquidity baking. For LP it’s best to have pairs that correlate a lot. We all want to have XTZ gain value against USD ultimately (no correlation). But each time XTZ would gain value, LP would lose XTZ to USD (impermanent loss). BTC and Tezos correlate more than XTZ and USD, therefore it makes way more sense to provide liquidity to a BTC<->XTZ pool than to a USD<->XTZ pool (from a liquidity provider perspective).
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I can’t speak to the choice of asset, but I’ve looked at the changes to the code and they appear sound.
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David, that’s not the purpose of Liquidity Baking, and also that’s not what impermanent loss is, nor is impermanent loss really a concern here.
LB is not meant to be another yield farming option akin to other DeFi options you have out there. It’s meant to power and expand Tezos DeFi to multiples beyond its own value. LB as a XTZ-USD pair provides a lower risk profile than a highly correlative pair. That’s the point. You’re probably not the liquidity provider market for LB. It’s a lot easier to fill up a TVL based on a lower risk profile than a higher risk profile; for people to hedge between XTZ and USD 50/50. This is for people who are concerned about market volatility and so they don’t want to be fully in crypto nor fully in USD, they want to go half and half and make their money off of the trading volume between the two (of which XTZ-USD is about 5x more than XTZ-BTC in centralized exchanges), which will matter whenever the subsidy is removed and fees are no longer burned. Until then that volume still means a lot with regard to mitigating the inflation of the subsidy since fees are burned.
Further, that is not what impermanent loss means. Impermanent loss is not the sense of loss you feel between two competing investment strategies. What you’re thinking of is opportunity loss.
Impermanent loss has to do with an event that occurs within an individual investment in a Liquidity Pool. That is when the price changes and thus the two piles of inventory you put down are off-balanced, and you have one larger amount of an asset than you put down and one smaller amount of the other asset (I said amount, not value), which happens whenever the price changes from whence you invested. THAT is impermanent loss. Impermanent loss can then be mitigated by the fees that are gained over time, or when the price returns to the point it was when you invested.
Also when you have two highly liquid/convertible pairs in a CPMM, impermanent loss doesn’t matter really because you can convert the larger amount of the asset to the other asset without slippage. This is the case with USDtz. You can convert on TezEx or with a Mintery as explained in the original post. And of course you can convert XTZ in a million other places.
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Great, thanks for the help, I will see if I can swap back. Another issue I see with Usdtz is the fact that it’s not available to US residents, which I would assume that’s the reason why there are no US bakers minting Usdtz. So why would one want to swap out tzbtc for something that is not available for the largest market in the world?
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So a couple things.
-
Yes we are working hard to expand participation to the US. It takes time and resources, the PsCUK proposal passing would certainly help in that regard.
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Tether (USDT) has a similar restriction. See: FAQs | Tether
Nonetheless, XTZ/USDT achieves more volume every day than any other pairing of XTZ. That is, not only is XTZ-USD traded 5x more than XTZ-BTC daily (i.e. 5x more volume), and not only does XTZ-USDT alone makes up the majority of XTZ-USD trading, but also XTZ-USDT trading alone far outweighs XTZ-BTC trading daily.
XTZ/USDT achieves more volume every day does not imply XTZ/USDtz achieves more volume every day.
Your statement is not wrong, but you seem to have missed the point. Kevin was responding to the concern about USDtz being restricted to US residents, and how that might negatively impact liquidity baking by excluding a huge part of the market.
Kevin said USDT is also restricted to US residents but even so, XTZ-USDT still has more daily trading volume than XTZ-BTC which is not restricted to US residents. Being restricted to US residents doesn’t stop certain trading pairs from having more daily volume than unrestricted trading pairs.
Personally I prefer kUSD, as it is community owned and already has traction within the ecosystem. In the past I’ve had issues with swapping back and forth between USDC and USDtz
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Please see previous comments referring to the role of algocoins and how they are stabilized. Although, kUSD and uUSD would be the most immediate beneficiaries of a scaled USDtz, they themselves wouldn’t work for liquidity baking given how it’s created, the collateral they need to scale, and the increase of stability fees necessary for them to hold their peg. Without convertibility they lose their parity with the USD. A scaled USDtz would enable them to scale and keep their peg without shooting their stability fees through the roof. In fact we’re developing a tool to help on that end systematically which is like curve.fi on Tezos.
This is a redirection and a non-answer. We’re not talking about subsidizing usdt, but we’re talking about usdtz so not sure why it would even matter in this context. Second, the fine print in what you posted allows “eligible participants pursuant to US law”, which compared to your usdtz terms and condition it says any transfer to US citizens is void.
So what guarantees do we have in you, with the admin key that can burn and print at will, that you won’t burn the amounts of usdtz that may or may not be held by US residents?
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You are correct. There are many other factors. This however is pointed out merely as a data proxy.
Secondly, take a look at Quipuswap analytics and the history of Tezos liquidity-volume ratio. USDtz has literally outperformed every other coin on Quipuswap. That’s another proxy.
Taking a snapshot of Messari right now, at at time when Tezos is doing very well in terms of overall volume, we can see how individual markets are doing. It’s clear that there is much more trading of XTZ-USD than XTZ-BTC.
Another way to look at the subsidy of LB and whether we are ‘doing well’ in terms of neutralizing the subsidy (a built in mechanism of LB is that the .1% fees charged by AMM traders are burned to offset the subsidy in part or in full), is to see if LB volume is living up to it.
The subsidy is 2.5 tez per block, which is 7200. At 30 second block-times, there is a ~2,880 total subsidy of XTZ per day. Since the fee (which is burned) is 0.1%, 1000x that daily subsidy would need to be produced as volume per day. 7200*1000= 7,200,000 XTZ volume needed per day average needed to offset the subsidy.
At $7.67 price XTZ, that would be $55,224,000 in volume per day Average that Liquidity Baking AMM would need to achieve in order to completely offset the subsidy.
Looking at the Messari chart again, not a single XTZ-BTC market appears to achieve that in this snapshot. In fact, combining multiple XTZ-BTC markets hasn’t achieved that. However, several XTZ-USD or XTZ-USDT markets have been achieving that individually.
For good measure here’s another such snapshot from yesterday when the price of XTZ was lower. At the price of 6.60 per tez, 6.61*7,200,000 XTZ = the neutralizing volume number to meet or beat would have been $47,592,000
The highlighted line shows (below it) the first XTZ-BTC market making its appearance.
The way I see it at this point is that if bakers do decide to subsidize and swap out tzbtc, (which is legal for anyone in the world to own, but hard to get) with usdtz which is not legal for US residents and is void according to the terms and condition, we are putting trust in the person who holds the admin key (Kevin) which can burn anyone’s Usdtz, that he wouldn’t bow down to pressure if US regulators come checking in on him. That’s a mighty great leap with literally 0 reassurance or guarantees. That’s a no go for me, unless Kevin can offer more reassurance/guarantees.
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I also want to know why this restriction exists, seems USDC itself does not come with this restriction, then what’s the reason with a wrapped USDC has more restriction than the original coin itself ?
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i can’t speak authoritatively regarding the legal issues with USDtz. my understanding is that ownership is fine, while minting has restrictions. there are specific KYC’ed entities that mint USDtz to seed the platform with tokens and then anyone on Tezos can hold them.
regarding the effort to move the management of the token contract to a multisig, it will be based on the same one used for the Kolibri protocol. all contracts are open-source and can be reviewed by anyone who’s interested. i’m also confused by the idea that stabletech the company can willy-nilly burn token balances. it’s a company, if you have a problem you can seek satisfaction in a court, multisig or no.
I would re-read the terms and conditions. I may not be a lawyer, but I don’t think it takes a lawyer to be able to understand his terms and conditions and how it relates to US residents. Literally the first two paragraphs read:
THE OFFER AND SALE OF USDtz HEREIN HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION. THIS OFFERING IS BEING MADE ONLY OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS (AS DEFINED IN SECTION 902 OF REGULATION S UNDER THE SECURITIES ACT)
{This says nothing about minting, but the actual sale of USDtz.}
IF YOU ARE A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT YOU MAY NOT UTILIZE USDTZ SERVICES (AS DEFINED BELOW) AND ANY
PURPORTED TRANSFER OF USDTZ TO ANY SUCH U.S. PERSON IS VOID.
These paragraphs literally say if you’re a US resident you cannot own it, if you do it’s void. Pretty clear to me.
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Yes, this is also in the Tether FAQ, separate from the previous screenshot. I’ll post it here FAQs | Tether
This is not atypical in crypto.
And to reiterate why Tether matters as an example here, XTZ-USDT is already achieving the desired liquidity and more importantly the desired volume that Liquidity Baking has been intended/expected to achieves and it has been demonstrating so in several different markets. Therefore, if nothing else, any restrictions that USDT has had (which are similar to USDtz restrictions) have not been an impediment to achieving those desired ends.
