SIP-0071: Free Zero, Free Markets, Free Individuals

You forget what triggered the first mass wave of redemptions: FREEZING DEPOSITS INTO BABELFISH.

Stopping ZUSD deposits into Babelfish while not having a swap option with other pairs to trade with left its hodlers with only two choices: keep holding ZUSD, or Redeem.

So chain of events:

  1. Pause ZUSD deposits into Babelfish ‘for a short time to see if more stables flow in’. Pause takes too long.
  2. ZUSD holders panic and redeem en masse. Zero LoCs wake up to see their bitcoin holdings decreased. More panic.
  3. Panic from Zero LoCs causes devs to take away redemption option ‘for a short time to give liquidity time to build up’
  4. No bumper liquidity comes in. Why? Protocol inefficiencies (slippage, few tradable options, low rewards), non-existent marketing etc. Originations and redemptions continue, though at a slower pace. Devs panic.
  5. Pause originations ‘for a short time to give liquidity time to build up’. Inefficiencies remain the same. Without incoming liquidity, protocol self-cannibalizes.

STOP arbitrary “pausing things for a short time to see what happens”. This ‘Zero Pause’ is an indefinite wait for a random 3M deposit of stablecoins into the protocol. You can’t predict when it will happen.
Almost 5 months in, we’ve just seen:

  • More ZUSD get redeemed.
  • Number of wallets holding DLLR is on the decline.
  • Total DLLR in circulation is on the decline.
  • Number of Zero LoCs is on the decline.

This is not ‘things going according to plan’

So:

  • Free everything and let users actually USE the protocol.
  • Babelfish rewards manager is up and running. Let it give users more reason to deposit alternative stables.
  • Get Zero protocol running normally. Zero users know they need to manage their Lines of Credit.
  • Let Sovryn protocol generate revenue and to incentives to bridge in assets into the protocol, buy and stake.

This is an opportunity to reverse the harm all the pauses have been making.

8 Likes

In my opinion, several things changed since Zero was effecively shut down:

-BTC price is much higher, making it potentially more attractive for users to hold DLLR and BTC instead of BTC only. Trading in this price regime should be much more two-sided compared to a btc price of 16k USD.

-Babelfish incentive curves are working, providing incentives for a better balance of stablecoin inflows and outflows.

-DLLR lending pool gained a bit of traction.

-DLLR margin trading is available, giving more incentives to hold DLLR.

The proposed 13% fee has not been tested yet but it seems very high and restrictive. I think with the points mentioned above, it should be relatively safe to “open the door” a tiny bit and monitor how it works out. We need to gather info on the effect of reducing fees anyway in order to come back to full functionality at some point in the future.

5 Likes

I think it is a much better plan what I described in my post:

Your suggestion is much better than keeping it at 99%, but not good enough in the long term… Zero has to self regulate… has to be transparent and immutable… Stop making arbitrary changes… today 13%, tomorrow 5%? day after 99%? This is not inspiring any confident as a Zero user… Specially because origination fees affect the amount of redemption in a non predictable way… I tell you, I wouldn’t put any decent money locked in Zero, if the model is not transparent and predictable.

Please, @all, read and consider an idea in the lines of what I described in my post as a possibility.

2 Likes

Are you saying we should make a fee floor and automate fee changes based on certain conditions?

What conditions would we use?

I’ve seen @light suggest a few things, based on babelfish liquidity ( please correct me or clarify if I’m off @light). But I’m uncertain how development would be. Can we reference Babelfish liquidity for use in smart contracts?

What’s your idea here? Number of redemptions maybe?

I think @Yago implied a similar thing, but I’m almost certain his solution was to manually change it. Honestly, it was basically like that before Zero was axed. Community call once a week that talked about fee rates, both for the benefit of the LOC holders, and the DLLR peg.

1 Like

the model I proposed on detail in my post before, is basically about monitoring the redemptions and establishing a pool with BTC (coming from origination fees) to backoff redemptions under a specific collateral ratio. It is a bit complex, I encourage all to at least have a look.
Things do not have to be 100% automatic at the beginning. What is more important is to have an open and transparent protocol that is predictable…

2 Likes

:warning: Please note that there is a technical requirement for SIPs :warning:

It should be executable and this executable part should be validated by the Sovryn core team before the SIP is created.

If this SIP doesn’t have a transaction payload, it won’t work because the only way to update Zero contracts values is via execution the SIP transaction.

Encoded input for the transaction to be executed is expected to be added to the SIP text so that anyone can do independent validation prior to the SIP creation and compare it with the SIP creation transaction.
For example see this proposal creation transaction Input section: https://explorer.rsk.co/tx/0x8a832982a1e3de3d5e0d7a1a8bdd9e3a23dcea333e2e08c48a740a7060f6efcb?__ctab=Transaction

SIP validation is a specific task that should be planned in advance depending on the core team workload.

Please note that if the SIP transaction is not validated, it will be cancelled.

For further details please reach out for me (tagging @tjcloak) on Discord #bitocracy channel Discord

2 Likes

I will create this proposal with a hardhat task in the zero codebase.

I also submitted a test transaction to Testnet to try out the functionality.

https://explorer.testnet.rsk.co/tx/0xe6e7b4e4aac2deae9cfdca6e6b0c1d6a1ec061a2c40e438f013250cf0de7e80e?__ctab=Logs

2 Likes

Please fork from GitHub - DistributedCollective/zero-contracts: Zero smart contracts and create a PR, that would facilitate validation.
Anyway, because it is necessary to have a snapshot of the transaction data publicly available to compare after the SIP created with the actual SIP transaction and for validation by community members, please add it to the SIP text.
This Input value from the testnet tx you provided would be expected to be published:

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

However if you provided this data, it would not be validated because in the SIP text SIP-0071: Free Zero, Free Markets, Free Individuals by capitalist42 · Pull Request #71 · DistributedCollective/SIPS · GitHub it says:

If approved, the origination fee will fluctuate between 13% and 100%.
The following change will be made to the Zero Protocol base parameters:

- Updating "BORROWING_FEE_FLOOR" from 99% to 13%

but the provided transaction input data would update borrowing fee floor and max borrowing fee:

[
    "setBorrowingFeeFloor(uint256)",
    "setMaxBorrowingFee(uint256)"
  ],
  [
    "0x000000000000000000000000000000000000000000000000016345785d8a0000",
    "0x00000000000000000000000000000000000000000000000003782dace9d90000"
  ]

I understand that you just tested the waters but at the same time this is a good showcase explaining the validation requirements.

Please notify us when ready for validation, we will plan validation and update upon completion.
Thanks!

2 Likes

Hey @capitalist42 have you spoken to anyone about the process for testing and QA of the SIP? All executable SIPs must all meet the same rigorous criteria for safety and security. Regardless of the merits of a SIP, if it have not been reviewed and tested it should be an automatic rejection.

The Bitocracy channel in discord is a good place to discuss this. I will ping you and Tyrone there.

2 Likes

If you would like this SIP to be put to the vote, please delegate VP to the following address.

0x8131522029063A1BD334017cc1a969C55367DFE2

1 Like

How is this a functional two-sided market? How does setting the origination fee rate at “market rate” (which isn’t really market rate, if you intend on keeping your LOC open for more than a year) address the demand side of the market for DLLR?

I don’t know what is the current market rate for minting ZUSD. But I am certain that a 10%~15% rate is much closer than 5% or 99%.
It will be a functional two-sided market if the rate is closer to the market clearing rate when compared to the 99% rate. With a 13% rate, I predict there will not be a high amount of excess supply of ZUSD.

DLLR can still be both minted and redeemed. Remember that there are currently two stablecoins in the DLLR basket: DOC and ZUSD. It remains possible to mint DLLR with both DOC and ZUSD. What is not possible is to mint more ZUSD right now without paying a very high price (99% origination fee).

At the time of writing, only 1% of DLLR was backed by DOC. So, I used the words “DLLR” and “ZUSD” interchangeably. I was referring to the ZUSD.

If anything, DLLR is safer to hold than ever right now because the peg has been more stable now than at any point in the past. This FUD about “average users will not hold DLLR” is totally unfounded.

Number of wallets holding DLLR dropped from ~265 to ~234.

But we still have millions of DLLR in overhang that is just waiting to either be repaid or redeemed, and we don’t know which will happen first.
@Hyde mentioned that there is a strong demand for DLLR. People are converting XUSD into DLLR.

This is a misphrasing of what I said :frowning: I made a tongue-in-cheek comment about future borrowers being suckers if the origination fee rate was lowered to make it appear that new issuance would be economically sound , even though in reality it would pretty quickly result in chronic redemptions again due to the liquidity imbalance.

I did not expect to earn 4.15% APR (BTC) for max staking. :rofl:
And I did not expect to get redemption with a 430% collateral ratio.

This is not my approach. My approach is:
* Price the origination fee above market rates (to account for long-term 1+ year borrowers)
* Engage in activities to build organic demand for hodling DLLR and using it in circular economies
* If we notice that liquidity is running low (I have proposed 2 million cumulative between Mynt and BF) then raise origination fee rate floor to 99%
* Lower again after liquidity is restored

Do you think the origination fee should be 20%+?
I would like to have a built-in price discovery mechanism in the Zero Protocol. But sadly, it will include a lot of code changes.
To me, your approach is still “queue-rationing” since you are expecting to raise the origination fee floor to 99% in the case of illiquidity.

To return to your analogy: Bitocracy allowed the Zero restaurant to become so full with customers that the kitchen ran out of food, and everyone was packed into the dining area shoulder to shoulder.

The point of the ramen analogy is that pricing the rate close to the market clearing rate is better and more efficient.

We have made good progress, we should keep it up.

What is the actual app or partnership after the SIP-0066? I only see a decreasing number of DLLR holder wallets.

3 Likes

If the SIP gets approved, the effect of the Babelfish dynamic curves will be one of the behaviors I want to observe.
With a 13% rate, I expect a low amount of ZUSD excess supply will go to BabelFish and push the reward rate higher.

1 Like

I agree that FREEZING DEPOSITS INTO BABELFISH triggered the redemptions wave. There was simple no way to clear out the ZUSD excess supply.
And removing ZUSD redemption page was bitch move. It hurted users confidence on the new currency we are issuing.

To me, pricing the rate to 13% is first step to get back market efficiency back to the Sovryn protocol. I hope to propose open data model to guide the rate decision making later.

4 Likes

This SIP has gathered more than 1% of total voting power for creating proposal.
total delegated voting power so far: 3,815,972 ~(3.5%)

3 Likes

@TJCloak
here is the populated tx data that will be used for creating SIP.

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anyone can decode the tx data into human readable format:

npx hardhat sips:decode-sip-data --data DATA_TEXT
1 Like

this is the result returned by running the verification hardhat task

npx hardhat sips:decode-sip-data --data 0xda95691a00000000000000000000000000000000000000000000000000000000000000a000000000000000000000000000000000000000000000000000000000000000e0000000000000000000000000000000000000000000000000000000000000012000000000000000000000000000000000000000000000000000000000000001a000000000000000000000000000000000000000000000000000000000000002200000000000000000000000000000000000000000000000000000000000000001000000000000000000000000f8b04a36c36d5dbd1a9fe7b74897c609d6a17aa20000000000000000000000000000000000000000000000000000000000000001000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000010000000000000000000000000000000000000000000000000000000000000020000000000000000000000000000000000000000000000000000000000000001d736574426f72726f77696e67466565466c6f6f722875696e743235362900000000000000000000000000000000000000000000000000000000000000000000010000000000000000000000000000000000000000000000000000000000000020000000000000000000000000000000000000000000000000000000000000002000000000000000000000000000000000000000000000000001cdda4faccd00000000000000000000000000000000000000000000000000000000000000000d115349502d303037313a2046726565205a65726f2c2046726565204d61726b6574732c204672656520496e646976696475616c730a68747470733a2f2f666f72756d2e736f7672796e2e636f6d2f742f7369702d303037312d667265652d7a65726f2d667265652d6d61726b6574732d667265652d696e646976696475616c732f333035340a52656f70656e205a555344206d696e74696e6720696e205a65726f2070726f746f636f6c2077697468206120313325206f726967696e6174696f6e2066656520666c6f6f722e0a2d2d2d0a0a2020202023232053756d6d6172790a0a20202020496620617070726f7665642c20746869732050726f706f73616c2077696c6c2072656f70656e205a555344206d696e74696e6720696e205a65726f2070726f746f636f6c2077697468206120313325206f726967696e6174696f6e2066656520666c6f6f722e0a2020202054686520676f616c20697320746f206272696e67206261636b20612066756e6374696f6e616c2074776f2d7369646564206d61726b65742c0a20202020726573746f7265207573657220636f6e666964656e636520696e207468652073797374656d2c20616e642067656e6572617465206d6f726520726576656e756520666f72204269746f6372616379207374616b6572732e0a0a202020202323204261636b67726f756e640a0a20202020466f7572206d6f6e7468732061676f2c20746865206f726967696e6174696f6e2066656520666c6f6f72206f66205a65726f2050726f746f636f6c207761732072616973656420746f203939252077697468205349502d303036362e0a20202020457373656e7469616c6c792c204269746f63726163792070617573656420746865206d696e74696e67206f66205a55534420746f206d61696e7461696e2074686520444c4c52207065670a20202020616e64206d696e696d697a65205a55534420726564656d7074696f6e732e0a20202020447572696e67207468617420666f75722d6d6f6e74682074696d6520706572696f642c207365766572616c206b6579206f62736572766174696f6e732077657265206d6164653a0a0a202020202d2054686520746f74616c20737570706c79206f66205a555344206465637265617365642066726f6d20617070726f78696d6174656c7920362e3639206d696c6c696f6e20746f20342e3538206d696c6c696f6e2e0a202020202d20417070726f78696d6174656c792031206d696c6c696f6e205a55534420726564656d7074696f6e7320746f6f6b20706c6163652e0a202020202d2041726f756e6420312e3038206d696c6c696f6e205a555344206372656469742072657061796d656e74732077657265206d6164652e0a202020202d2054686520746f74616c20636f6c6c61746572616c20726174696f20696e637265617365642066726f6d2061726f756e64203337322520746f20353330252e0a202020202d205468652039302d646179206d6f76696e672061766572616765206461696c7920726576656e75652064726f707065642066726f6d20302e30333636372042544320746f20302e3030393338204254432c200a2020202020206120726564756374696f6e206f6620617070726f78696d6174656c792037342e34252e0a0a202020202323204d6f7469766174696f6e0a0a202020205765207365652074686174207468652064656d616e6420616e6420737570706c79206d61726b6574206f66205a55534420686173207265616368656420616e20657175696c69627269756d20706f696e742e200a2020202054686572652077657265206f6e6c792061726f756e642035304b205a55534420726564656d7074696f6e73207468617420746f6f6b20706c61636520696e204e6f76656d6265722e200a2020202054686520657863657373205a55534420737570706c7920686173206265656e2072656d6f7665642e200a202020205468652063757272656e742031342520696e7465726573742072617465206f6620444c4c5220616c736f20696e64696361746573207374726f6e672064656d616e642e200a202020205468657265666f72652c206974206973206120736f6c69642074696d6520746f20726573746f726520612066756e6374696f6e616c2074776f2d7369646564206d61726b6574207768657265200a20202020696e646976696475616c732063616e2074616b6520746865207472616465206f66206d696e74696e67206e6577205a555344207769746820746865207269736b206f662067657474696e672072656465656d65642e0a0a20202020416c6c20446566692050726f746f636f6c732061726520636f6e666964656e63652067616d65732e0a202020204269746f63726163792069732061207072697661746520656e7469747920746861742069737375657320707269766174652063757272656e63696573206261636b6564206279204254432e200a202020205468657265666f72652c20697420697320696d706f7274616e7420746f20636f6e7369646572207075626c6963206f707469637320616e640a2020202070726573656e742074686520706c6174666f726d2061732072656c6961626c6520616e64207472757374776f727468792e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=>

[
  [
    "0xf8B04A36c36d5DbD1a9Fe7B74897c609d6A17aa2"
  ],
  [
    {
      "type": "BigNumber",
      "hex": "0x00"
    }
  ],
  [
    "setBorrowingFeeFloor(uint256)"
  ],
  [
    "0x00000000000000000000000000000000000000000000000001cdda4faccd0000"
  ],
  "SIP-0071: Free Zero, Free Markets, Free Individuals\nhttps://forum.sovryn.com/t/sip-0071-free-zero-free-markets-free-individuals/3054\nReopen ZUSD minting in Zero protocol with a 13% origination fee floor.\n---\n\n    ## Summary\n\n    If approved, this Proposal will reopen ZUSD minting in Zero protocol with a 13% origination fee floor.\n    The goal is to bring back a functional two-sided market,\n    restore user confidence in the system, and generate more revenue for Bitocracy stakers.\n\n    ## Background\n\n    Four months ago, the origination fee floor of Zero Protocol was raised to 99% with SIP-0066.\n    Essentially, Bitocracy paused the minting of ZUSD to maintain the DLLR peg\n    and minimize ZUSD redemptions.\n    During that four-month time period, several key observations were made:\n\n    - The total supply of ZUSD decreased from approximately 6.69 million to 4.58 million.\n    - Approximately 1 million ZUSD redemptions took place.\n    - Around 1.08 million ZUSD credit repayments were made.\n    - The total collateral ratio increased from around 372% to 530%.\n    - The 90-day moving average daily revenue dropped from 0.03667 BTC to 0.00938 BTC, \n      a reduction of approximately 74.4%.\n\n    ## Motivation\n\n    We see that the demand and supply market of ZUSD has reached an equilibrium point. \n    There were only around 50K ZUSD redemptions that took place in November. \n    The excess ZUSD supply has been removed. \n    The current 14% interest rate of DLLR also indicates strong demand. \n    Therefore, it is a solid time to restore a functional two-sided market where \n    individuals can take the trade of minting new ZUSD with the risk of getting redeemed.\n\n    All Defi Protocols are confidence games.\n    Bitocracy is a private entity that issues private currencies backed by BTC. \n    Therefore, it is important to consider public optics and\n    present the platform as reliable and trustworthy.\n\n    Reopening ZUSD minting will generate more revenue for Bitocracy stakers. \n    The market will revalue the SOV token to a higher price. \n    With high transaction fees in the Bitcoin network and upcoming halving,\n    the price signal of the SOV token will be the best marketing to bring new users to the Sovryn platform.\n\n    ## Why 13%\n\n    The number we have chosen is close to the current interest rate of DLLR\n    but not too high that speculators won't pay. \n    The number should be lower than the interest rate of DLLR simply\n    because minting ZUSD requires more collateral (average 560%)\n    to maintain without significant redemption risk.\n\n    The number is derived from the golden ratio.\n    5 * 1.618^2 = 13.08962\n\n    The 13% fee will significantly restrict the growth of the ZUSD supply\n    but not be too high to stop the growth completely.\n\n    ## Proposed changes\n\n    If approved, the origination fee will fluctuate between 13% and 100%.\n    The following change will be made to the Zero Protocol base parameters:\n\n    - Updating \"BORROWING_FEE_FLOOR\" from 99% to 13% by calling `setBorrowingFeeFloor(uint256)` \n      on the `0xf8B04A36c36d5DbD1a9Fe7B74897c609d6A17aa2` contract\n      with the encoded data `0x00000000000000000000000000000000000000000000000001cdda4faccd0000`.\n\n    ## License\n\n    Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).\n    "
]

where
"0xf8B04A36c36d5DbD1a9Fe7B74897c609d6A17aa2" - LiquityBaseParam contract address
[ { "type": "BigNumber", "hex": "0x00" } ] - 0 value (not sending any RBTC with this transaction)
"setBorrowingFeeFloor(uint256)" is the function signature to set borrowing fee floor
"0x00000000000000000000000000000000000000000000000001cdda4faccd0000"

=================================================================

when the SIP is created, anyone can compare the data above with the data of the Input field of the SIP creation transaction in rsk explorer to check if they are the same - this will guarantee that the SIP execution does what described in the SIP - if executed, the SIP will replace the BORROWING_FEE_FLOOR value on LiquityBaseParam from 0.99 to 0.13

3 Likes

SIP0071 will start voting on Dec 24. :rocket:

2 Likes

We need a broader perspective to understand the entire situation.

  1. ZUSD deposits in the BabelFish aggregator were paused when they accounted for over 99% of all stablecoins within BabelFish.
  2. The dominance of ZUSD prompted Zero users to withdraw other stablecoins from the aggregator.
  3. This took place before the introduction of Balancing Curves.

Currently, stablecoin distribution in the BabelFish aggregator seems more even, but there’s a clear decline in total liquidity.

One of the reasons could be that XUSD trading pairs are solely on alpha.sovryn.app.

The new Sovryn web app doesn’t facilitate any direct XUSD usage for trading, lending, or AMM.

Furthermore, it’s not straightforward to access alpha.sovryn.app from the new web app, complicating user engagement. Many users might not even realize how to use XUSD on Sovryn. New Sovryn web app primary focuses on DLLR - compared to Alpha - it is very limited.

Without drawing in external stablecoin liquidity to Rootstock, a comparable issue might emerge, albeit potentially less severe, as there are not Balancing Curves in place.

It’s clear that for Zero users aiming to shift to more mainstream stablecoins, BabelFish is crucial. However, the available ETH and BSC stablecoin liquidity presents a bottleneck.

I think that with taking all this into considersation, there are couple of things that need to happen first.

That is why I would suggest delaying this vote.

@capitalist42 - I would love to have some feedback from You.

3 Likes

Hey everyone I’ve been trying to catch up with all the forum conversations. I think @light and @Hyde perspectives are very valuable.

I used Zero from its closed beta stage and even hosted physical workshops teaching people how to use it and my perspective is this:

Zero is truly only valuable when people can open an LOC knowing that the system will work as intended for several years. even with a 13% origination fee people are better off getting the legacy lending at +14% because:

A) You are in no risk of redemptions.
B) The legacy lending has been running uninterruptedly since its launch, meaning there is less uncertainty.

There are also other alternatives like borrowing DOC in Sovryn legacy lending for around 12% or on Tropykus for around 10%, without the headache of worrying about anything else.

You would need to keep your Zero LOC open for at least 2 years to make it worthwhile. So we need to make sure that if we open Zero again we can guarantee that it will run for several years uninterruptedly. Without enough demand for DLLR I struggle to see this happening.

I’ve already suggested a few things we can do to help in driving it’s demand.

1- Get DLLR into BTC Pay server so it is easier for merchants to start accepting it (I would very happy to add it to my ventures when possible), I don’t have the technical know how in order to do it but I think it shouldn’t be something too challenging for a developer: How to add an Altcoin | BTCPay Server

2- I did an interview with the team from Paydece, a p2p trading platform for stablecoins. They’ve recently added Rootstock, while they only have DOC, RifUSD and RUSDT at the moment, I’ve created a community with them and have a direct channel of communications with their team.
If some of the community join and we use the app, showing increase transactions and users I feel very comfortable that we can request DLLR to be added fairly quickly.

I can leave some links:

Interview: https://youtu.be/BNYKgalA5Ek
Join the p2p community: PayDece

I’ve already requested the team to add the Australian dollar to their app (AUD) and on 2024 I will begun aiming to onboard the different crypto communities from around Sydney. This could be a great way for them to start getting to know about Sovryn and DLLR if we get the coin in the dapp.

I can’t do this alone though, I need help from a developer to do the BTC Pay server, and the community to join the p2p platform and generate at least some activity to make it worthwhile for them.

If there any other ways I can help grow DLLR adoption I’ll be happy to do what I can, and I’m always all ears for any idea.

As far as the opening Zero voting goes, I will refrain from voting until I can see that the protocol is ready to be opened and not be back in pause after a short run.
I am not sure how many times Zero can be un-paused and paused again before we lose credibility in the eyes of the market, but I’m sure there’s a limited amount of chances de we get and that we have to be careful with them.

I still applaud the efforts of this SIP and love to see more community initiated endeavors such as this one.

Stay Sovryn!

1 Like

Whether it is better to get around 16% fixed interest rate loan or not, it is solely value judgment call by the individuals.

Like you said the 13% fee is not cheap. And it is the point of this SIP; to reopen ZUSD minting with high rate and expected slow growth.

1 Like