Agree with this proposal. I had the same thoughts when I first came across the Maker whitepaper.
Vault owners are providing stability-as-a-service by minting DAI. DAI users benefit from stability of token. More people using DAI (relative to DAI supply) means higher demand for DAI, which should mean higher costs of using DAI and higher return on collateral for vault owners.
This is a more decentralized market oriented approach.
I opened a vault (well 2), because the stability fee is at 0%, the moment that rises it does not make sense to me to open a vault and will go somewhere else to get a return (Compund, dXdY, Aave, etc).
Im a very small player and not a big hodler, I understand how the current system is useful for big hodlers but not sure if that would scale as it is.
Please tell me if I’m wrong. Maybe I don’t understand the proposal very well, but I don’t think this would work?
If Dai worked like this, I don’t see any incentive at all for anyone to want to keep it, or even mint it. Why would I want an asset that’s pegged to something that already depreciates (due to inflation rates), but also by itself loses value over time?
In the proposal, people would be incentivized to mint DAI because depositing collateral would yield a return. There would be no stability fee and instead there is a rate of return on the collateral, based on people wanting to use DAI.
I’m not sure what you mean by DAI depreciating/disappearing. DAI is soft pegged to the USD so DAI would depreciate in tandem with the USD (as it does now under the current implementation). The vault owner may not choose to hold or use DAI so the rate of return is not negated.
I think the technical challenge would be extracting payments from DAI users. This could potentially be done using transaction fees (which would then be distributed to vault owners as return on collateral), but ideally the payments would be time dependent (ie similar to interest on a loan) and not usage dependent (ie transaction fee).
In the second part of your reply, I think that's what I'm referring to. But just to make it clear, from the article:
"This would have to be done such that DAI would simply disappear at a rate of 1% per year, leaving that much more collateral unencumbered than would be otherwise."
That's what I mean by depreciation/disappearing. But, given USD inflation rates, that 'disappear rate' would only make DAI less valuable, not more. At least, that's how I'm seeing it?
Hmmm yea I agree that part of the article doesn’t really make sense. If DAI were to disappear that would mean there is not enough DAI in circulation to redeem for collateral and close vaults. This would be deflationary (not inflationary) and would also make it hard to maintain the peg to USD.
With my proposal of using transaction fees, the DAI is not burned but rather redistributed to vault owners as return on collateral (a portion can also be distributed to MKR token holders also). The challenge would be to smooth out the variability in transaction fees paid by DAI users (since number of transactions being made are not constant all the time). This could perhaps be accomplished by sending the transaction fees to a pool of DAI administered by an algorithm (and of course governed by MKR holders).
Free ROss. I dont care what your opinions are of him. For his CHARGES he does not deserve a double life plus forty years without parole. This is insanity. Let this poor kid alone. I know in my younger years i fucked up bad. A young person should not have his entire life destroyed bc of those type of mistakes as a young adult.
On a seperate note I always enjoy his work even if i rarely agree with him. Better read than 95 percent of the shit articles floating around every day.
I would go even further and say war on drugs is complete nonsense. He and others like him should be immediately released from prisons. Victimless crimes is oxymoron, only goddamn statists believe in victimless crimes.
I still feel weird about reading a technical paper from him without thinking about what kind of person he is and what he did. It's like reading a paper by OJ Simpson. I mean, thanks for your ponderings about Maker, but dude, you tried to hire a hitman to kill multiple people.
Lol. Ok. You would be shocked what actual corrupt legal systems are like in countries where you aren't considered innocent until proven guilty, and jury trials, free legal defence, etc. It's not perfect, but it's pretty good in the US.
There's not really a way to spin it differently when someone literally paid someone to murder people he didn't like (and innocent bystanders). What does that have to do with the media? Personally I think that does make him a bad person.
They never charged him with that, perhaps they used this to scare people in making him out to be this violent drug kingpin? But if we say that’s true, do you know the circumstances around that? Or does it not matter and he was a bad person regardless of the reasoning?
If you find the Silk Road story interesting, I encourage you to read past the headlines. The trial was very corrupt. For example, one of the FBI agents actively involved in the case and they sourced evidence from ending up serving prison time for being corrupt and stealing bitcoin, among other things.
Of course it had something to do with him. This is exactly what I'm talking about. This kind of PC black and white thinking. Everything is so censored and lacking in nuance or appreciation for the complexities of the human mind and condition. Yes, if Hitler was a talented artist (he wasn't), I would be very interested in experiencing his art.
I agree with you in the context of art, but not in other contexts. For example, Michael Vick’s book tour should not be a thing. Whether or not his book is of any quality, last time he was given a voice and money, he used them to exploit and abuse animals. I think there are scenarios where “canceling” someone, aka not giving them a stage to do further harm, is justified.
Completely disagree. The difference is Michael Vick's book is shit and therefore it doesn't deserve recognition. If instead, he had a compelling theory for combining quantum and classical models of physics for example, I would listen. The person must be separated from their ideas. Full stop.
[The sheer amount of corruption surrounding his conviction should be enough for most people to see the light.](https://www.wired.com/2016/11/ross-ulbrichts-lawyers-point-another-corrupt-agent-silk-road-case/)
Even with the agencies stonewalling his lawyers left and right they couldn't hide all their misdeeds.
This is interesting. I don't think he understands that you have to do this efficiently. AFAIK it's not exactly easy to reduce the number of circulating DAI by reducing everyone's accounts with a yearly APY. I get the mechanism but I'm not sure it's efficient.
Oh yea tl;dr -
He's saying instead of having a stability fee, vault owners should just be able to mint Dai at will. The DAI will have a negative interest rate* so holders of DAI will just pay a passive fee by sitting on it. The vault owners will then set an interest rate on a per vault basis**, that will capture the negative interest rate. The vault owners with the lowest interest rates wil back the Dai***. If the system is over-collateralized, the vault owners interest will likely be 0% and they will drop off the system. If the system is under-collateralized, the vault owners will likely capture more APY to pull back DAI out of circulation with high negative interest rates, or people will notice the high yield and start locking in ETH to back the system to recapitalize it.
*I'm not sure how that would be efficient.
**I'm not sure how this would effect the negative interest rate.
***I'm not sure how one would determine a set of "winning" vaults.
> He's saying instead of having a stability fee, vault owners should just be able to mint Dai at will. The DAI will have a negative interest rate* so holders of DAI will just pay a passive fee by sitting on it.
That sounds like inflation.
Currently vault owners can mint DAI at will as well (by depositing collateral). The proposal does not suggest any changes to this. The change is that collateral deposited in a vault yields a return, rather than being charged a stability fee. The return depends on how much demand for DAI there is (more people want to use DAI means the cost of using DAI increases and the vault depositors make a higher return).