Zero Governance Meeting #3 will be held today in the Community Voice room at 4pm UTC (12pm EDT).
The community is invited to participate. Come and bring your insights and questions.
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I think a high redemption fee just delays the inevitable. So I am all for lowering it (carefully by 0.5 at a time).
Of course I am squarely in Davids camp and think we need to get as many users on board as fast as possible and therefore think we need to lower origination fees drastically. Stalling the product adoption with high origination fees just kills the product over the longer term outright and I can see Davids thinking how a higher SOV price can help alleviate the problem.
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I want to share an informal study conducted in the Telegram groups of Citadel, Dojo, Spanish, Chinese, and Dutch, as well as in the channels of RSK and Defiant. I am very grateful to everyone who participated, their contributions are very valuable.
Having reached one hundred responses, I stop to inform them of the results.
The objective is to discover aspects related to the way of obtaining DLLR and its use, and share it with the community and especially with the Sovryn team, in case it is useful for them when making decisions.
The results are as follows:
First, when we asked how to obtain DLLR, 59% of the responses indicate through a swap in the dapp, and 41% through a loan in ZERO.
Secondly, when we asked what they do with their DLLR, 33.80 % of the responses say they exchange it for FIAT for personal consumption, 26,06 % use it for trading, 21,12 % for hodling, 13.38 % for hedging, and 5.64 % for remittances to third parties.
Finally, by conducting a particular analysis of that 21% who say they hodl, when we asked what they would do with their dollars in hodl, 35% of the responses point to placing it in Lending (for rewards), 24% in the AMM (for rewards), 23% in the Stability Pool (perhaps for rewards), and 18% would leave it in their wallet.
I have attached images describing the obtained results.
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Recording:
Getting more users onboard as fast as possible might create excessive supply and sell pressure on DLLR and cause depeg and more redemptions which is not desirable!
Hi @lactarius good initiative here! How would you say these survey responses inform any changes to the Zero fee parameters? (I assume you are sharing them here because you think they are relevant to this topic)
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That was not davids suggestion. his suggestion was to grow user and therefore SOV price and because of that you have higher DLLR rewards without completely making SOV even more of a inflated shitcoin. Therefore creating demand. But growing the platform is not the focus - it seems the focus is on being a technological purist wonderland were with 0 users you can get a stable price and everyone is happy.
We had one shot of capturing the imagination of the market - we likely blew that by trying to be perfect. Perfect is the enemy of the good they said…
Anyway.
As for the redemptions - why not make all loans no matter the collateral pay for redemtions. That way there is no collateral war. Make it by % bigger loans have a bigger share of the redemption happening safeguarding the little guys a bit. That way the burden of the peg is distributed on all shoulders and it doesn’t feel to bad for some individuals.
Also we still have no big ass disclaimer on the borrow page explaining redemptions. Thats not too hard to implement and should be top priority - you never get back the customers who are burned and didn’t know what’s going on. we are not in closed beta anymore.
it seems that only 33% convert to fiat and the peg is still so loose. This will like not change - thats a good number far surpassing my expectations (I would have said that number is way higher). Its unsettling that even with only a third of the DLLR converting we have so much trouble… You think that number needs to fall further? What if it never does? Is Zero a failure then?
It’s not clear to me that’s what it says. The questions on the images are phrased as hypotheticals e.g. “why would I buy or borrow DLLR?” I would be interested in knowing how many people responding to the survey are actually current Zero line of credit owners / DLLR minters or whether they are just answering the question hypothetically as if they would use these protocols in the future.
Also, the main offramp is the DLLR/RBTC pair, and people can use that to either end up with fiat or end up with BTC or other cryptoassets. So even if only 30% of DLLR holders are ultimately converting to fiat, a significant chunk of the remaining 70% could be trading DLLR for BTC or other cryptoassets which all puts downward pressure on the price of DLLR.
What do you think we should’ve done differently? Keep the fees low and make redemptions cheaper? Just trying to understand your point.
I don’t agree that we should spread out redemptions over all LoCs. Several people have already suggested the possibility of buying insurance to protect your collateral. My response is that Zero already has a built-in way to buy insurance – use a higher collateral ratio. That scales exactly with the size of your LoC, so the opportunity cost is proportional to your LoC. I think this is as it should be. This doubly incentivizes maintaining a high collateral ratio (on top of avoiding liquidations), which promotes the health of the system.
I totally agree that we need to have a more prominent warning on the dapp concerning redemptions, and it needs to be a high priority. We have also tried to highlight this in the wiki and in blog and forum posts.
2 Likes
This result is hard to interpret and may be influenced by a) the wording and b) our current experience with Zero.
It sounds like the survey was worded in the present tense. If so, then this number is probably already lower than it would naturally be because a lot of people are aware of and have experienced the cost of off-ramping and the negative effects on the system of doing that. This preference isn’t being expressed in a vacuum.
So it may not be as bad as it sounds. The biggest problems most likely happened when a much larger percentage of users was trying to off-ramp than they are now.
First, to explain what is already known: hypothetical words are used and in the present tense. Undoubtedly, responses from present, past, and future borrowers are mixed, with their experiences and expectations. Covering each specific group at different times would require multiplying surveys, would Sovryn pay for that? It seems that there are no funds for that.
Only a very small part of the communities participate in the forum. An even smaller part understands the current problem and can follow community calls on the subject (there were less than 20 people in the last one, including team members). An even smaller part is qualified to propose solutions or question them (perhaps there are not even five people who are not on the team and who actively participate in this regard).
That being said, the survey questions do not seek to propose solutions to the stability of the peg. Nor do they question the measures adopted. They aim to provide context and enrich the debate.
If we accept the results as valid, only 21 out of every 100 DLLR demanders will hold them, and of those 21, 16 will place them in lending, AMM, and the stability pool. When Sovryn activates lending with rewards, we will be able to observe if that 16% is sufficient to improve demand and supply balances.
Personally, I believe that increasing that number above 16% is as important as buying time using Exchequer funds to defend the peg. Entry and exit fees are mathematical variables that keep the patient alive. But to have a life, one must have dreams, to demand DLLR, one must nurture those dreams.
What else can be done until then? Perhaps… add DLLR as collateral for loans?
Your proposal is excellent!
Thanks for the additional thoughts and commentary!
fwiw the product and marketing teams have each done surveys at various points in time from our respective perspectives, we collect qualitative data and quantitative data and combine with onchain analysis to get a picture of what’s going on, where things are going or need to go, and use this to inform our efforts. So there have been and will continue to be resources allocated to this to continue improving things. To the extent this type of survey and analysis data is useful for informing governance we can look to make it publicly available as well. As far as funding for yourself or others to continue doing this surveying work on a regular basis, that would be something to discuss with Exchequer, I would suggest getting in touch with them and if they aren’t willing to fund it you can create a funding proposal and put it directly to Bitocracy.
Agree 
I was unaware that these market research surveys had been conducted. Furthermore, I don’t remember answering any questionnaires on Discord or Telegram groups in the last two years. I don’t know what their target audience was. Also, as you mentioned, since they are not made public, we are unaware of the results. I understand that they are not shared for strategic reasons, but perhaps it would be good for them to be perceived as genuine.
Based on what I mentioned earlier, I assumed that they had not been done and decided to conduct them to help regarding ZERO and DLLR.
It was not my intention to charge for it, neither now nor in the future. It is too serious a task that should be done by professionals.
Thank you for your words.
You don’t need to apologize for, defend, or explain why you did the survey. It was a great effort with admirable initiative, and every Sovryn applauds you! Every bit of data and insight are useful. Even if we did surveys some time ago, a new survey conveys more current information. Don’t misinterpret – light just mentioned other surveys to say that there’s a broader context for the direction we’ve already taken and the way we should interpret this data. And what I said was not intended to criticize but to try to interpret the results as accurately as possible. I understand the challenges of putting together a survey – and then getting people to spend the time to answer! Tthis is a useful addition with useful insights.
Keep up the great work!
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Based on my own calculation (0xFe2aa1E946f906E2fFfac19525F26A4298AaAF28), the Exchequer’s net DLLR volume is about 358000 USD so far.
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I’d like to add as an early Zero user, I responded to the poll above. My answers were based mostly on the past sense, and answered 1) ZERO loan, 2) Personal Consumption, 3) Lending. I don’t HODL stablecoins so for me personally I see no reason to HODL DLLR, since I’m 100% into BTC, and only use/own fiat when I need it. So for that it becomes very easy - rather than selling BTC and having to pay taxes, I can borrow against them, and use it for whatever bills or consumption needed. BUT, in regards to question no. 3, that is something I probably would do on top of consumption, if that choice was available. I’m not interested in the AMM pool because of IL, and as a firm believer in BTC, I don’t see liquidations currently as any major source of income.
Now, I know there are plenty of users that like to hold their fiat in stablecoin, especially for trading, so they can enter and exit trades quickly. Another market for stablecoins, I suspect, are especially 3rd world countries which use the dollar as their “store of value”. So if we want be people to HODL, I’m once again saying, where is the direct bridge from other stablecoins to DLLR? It should be as easy as doing any swap on alpha.sovryn.app.
In regards to the origination fee - with it at 5% there is in no way I’m borrowing more currently. I can borrow against 8% yearly interest somewhere else, why the hell would I pay a 5% one time fee on Sovryn? Only reason would be if my plan would be to borrow for longer than 7.5 months. Less - no reason to use Sovryn - and on top of that, currently the Babelfish bridge has no liquidity anyway so I can’t really use ZERO for anything. Considering the tax rules where I live, I can’t even convert DLLR to BTC, without getting hit by tax once I sell the BTC back to EUR.
I agree with others saying that an origination fee at 5% - was it not supposed to be temporary? - is just insane and makes the ZERO brand look bad. I do understand the importance of the peg, as I’ve pointed out before, but we cannot just leave the origination fee at 5%. We should at least get it down to 2.5% to start with, which is at least a bit more reasonable. Lets put the redemption fee at 0.5%, and let the market work the peg.
And for god’s sake, add info on ZERO if people are at risk at being redeemed because being first to fifth in line at least, OR somerthing. That will save Sovryn some bad will, when it’s actually in clear text that you can be redeemed if your CLR is too low.
Though it seems the two latest governance meetings haven’t really resulted in any changes to what was decided during the first one? How come? There have been a bunch of proposals made.
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I do agree that adding a metric / warning about redemption would be a plus.
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At Wirex. I’d rather stay Sovryn though, as I don’t trust Wirex at all, so it’s a risk, but risk is everywhere as it is.