The Coming Year for Sovryn

Zero user has real assets, real debts.
Zero has real assets and real debts.
Mynt has accounting entries, but no assets.

I believe that the Stability Pool should only receive real assets, and that is only the ZUSD from Zero Users. Otherwise it could happen that the same ZUSD is in the Stability Pool twice, when it is only owned by the ZERO user who received it in a LOC.

I see MYNT as a tool to create currency, not as a treasure. But I may be wrong on this point.

Mynt has accounting entries, but no assets.

I’m afraid I don’t understand what this means.

it could happen that the same ZUSD is in the Stability Pool twice

Can you explain how? I don’t see it.

Definitely my last message was not accurate at all. My mistake.

Correction 1: ZUSD cannot be in the Stability Pool twice. ZUSD can be there if the ZERO user decides to send them, or if MYNT decides to send them.

Rectification 2: MYNT receives DOC and ZUSD and creates sovryn dollar. In its Treasury it keeps DOC and ZUSD. Therefore MYNT has Assets as a back up of the sovryn dollar.

I hope I didn’t make a mistake this time. That said, let’s start again. Let me use some analogies to try to explain:

a) Every rbtc has a BTC behind it securing the peg. Would rbtc holders understand the use of those BTC as a financial investment? I think not.

b) Each Zero LOC has an amount of BTC as collateral. Would it be possible for ZERO to use those BTC to get a return? I would think it would not be accepted by the owners of the collateral.

c) What would happen if someone had stolen the gold from Fort Knox before 1971? It would have broken the monetary system and the gold standard. (Actually it happened, but that’s another topic). That’s why gold has to be well guarded. I remember in the Spanish Civil War over 500 tons of gold was to be held by the Russians, and was sent to Moscow. Guess where they will never return.

I am not saying that Mynt is Fort Knox or that the Stability Pool is the Bank of Russia, but the sovryn dollar deserves the best of backing.

I like this suggestion too. An insurance pool of 5-10% of the exposed ZUSD would go a long way toward mitigating the risk. We could probably quantify this to some degree based on historical data and a few hypothetical assumptions.

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If I’m understanding you correctly, you’re questioning that if Mynt would be using depositors over-collateralized collateral as it’s own in order to generate income, then is (in a way) creating a type of fractional reserve from ZERO user’s collateral? So if a LoC is liquidated and that collateral is elsewhere, then would there be extra risks from this type of system, if depositors knew that their collateral was being used elsewhere for profit? Or maybe this is just my interpretation of the information given above in different comments.

It is necessary to differentiate ZERO from MYNT.

As for the ZUSD of those who have an open LOC, they can do with them whatever they want.

However, if MYNT uses ZUSD to send them to the Stability Pool the Sovryn dollar collateralized in those ZUSD would be assuming a higher risk than if they did not go to the Stability Pool, is that correct?

That can actually happen because at the end of bull markets people get loans that will be liquidated in a flash once the bull run ends, the risk will be always at the end of bull runs. Liquidation is a fact in the crypto market and flash liquidations will always lead to a loss of funds sooner or later. The liquidation must always be made by people willing to park money knowing they can lose it, a mynt liquidation is trying to hide this fact.

Could we take the proceeds from liquidations and put them on a ‘drip’ to DLLR holders? This could create a soft, slow burning demand to hold DLLR.

We could set an arbitrary target like we want to have runway to pay 3% APY to hold DLLR over 12 months. Effectively we’re incentivizing DLLR savings, but by dripping the proceeds over time we’re smoothing out the volatility of SP liquidations.

Could be a way to drive demand to hold DLLR as savings versus other stable coins.

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