Of course Coinbase already owns 50% of Circle, the issuer of fiat back stablecoin USDC, so it has some considerable skin in the stablecoin game. But USDC recently de-pegged when it's reliance on only a few banking partners was exposed as incredibly risky. Not-so-stable after all it would seem, hence Coinbase's desire to diversify it's product range.
My take? Frax Finance's $FPI (Frax Price Index) says: "Welcome to the party! Don't worry about being late"
$FPI Offers a bonding (aka staking) mechanism of up to 4 years, via $veFPIS, which will be very familiar to anyone who's seen the veToken model before.
It's not even the only alternate stablecoin Frax offers $frxETH is technically a stablecoin too.
You can also stake, like any other $ETH product, with $stfrxETH
Above from DeFi Flywheel's excellent explainer on frxETH
Hear more about Frax's concept of the "DeFi Trinity" on this episode of the Empire podcast.
And The Frax Stablecoin Thesis from Flywheel DeFi
It's fascinating stuff.
All roads lead to Frax, as someone once said (it was likely Flywheel DeFi).
Let's give credit where it's due: It's a decent idea from Coinbase. That's why other similar products have already launched. Though, so far, not many have had much luck (very early days though and still-very-new $FPI is looking very solid).
Recent history aside, non 100% fiat backed stablecoins are better done by decentralized protocols like Frax Finance or Liquidity, who are especially skilled at this, rather than a centralised entity like Coinbase. Defi operates at a much lower cost and lower risk to traditional finance and Coinbase has many of the same cost structures of (though not all).
Coinbase should stick to what centralized entities do well. Permissioned, regulated products. One of which is their excellent Coinbase Cloud. Coinbase are an important part of the crypto ecosystem but trying to be the everything-store (e.g., NFT marketplace, Layer 2 etc..) isn't how they help long term.
Not to say decentralised finance can do everything either. Defi doesn't do KYC well and it isn't the appropriate place for fiat on and off ramps. However a strong and fair system has many participants and allows for specialisation in areas of strength and expertise that then allows the whole bigger and better.
The new financial world will look a lot like the old one, that's cause evolution beats revolution every single time.
But just leave the defi stuff to the professionals. And leave it decentralised please.
Something other than fiat backed centralised stablecoins (e.g., $USDC) or algorithmic casinos (e.g. TerraUSD $UST).
Olympus DAO ($OHM), in my opinion, is an interesting but ultimately failed experiment. It still limps along, but the core thesis, DAO owned liquidity, never really worked out. It did help others refine their own models.
I think what KlimaDAO is doing is an better implementation of the Olympus DAO idea (it's a fork after all).
Sidenote: In fact I think all of ReFi is pretty interesting and blockchain seems to be very a good fit for helping the carbon credits market evolve.
I'm most interested to see what Bitcoin has to say about all this. They have the right sort of value there waiting to be deployed: permission-less & decentralised. It's just locked away in really rigid technology is all.
and Stacks with their $sBTC project
Above from the sBTC whitepaper demonstrating the 'peg-in, peg-out' model
Both are going to have a lot to say in the near future about base liquidity in defi.
It's just not going to be Badger DAO's eBTC (sorry Badger, I do love your vaults though! Especially the GraviAural one)
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