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Encounter Stablecoin decoupling how to do, bookmark this hedging guide

CapitalismLab

23-03-14 14:54

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原文标题：《稳定币脱钩紧急逃生指南》

Original article by CapitalismLab

What should you do when your Stablecoin holdings are at risk of decoupling? What is the logic behind Brother Sun's seemingly useless operation of exchanging USDC for DAI?

From mainstream decentralized Stablecoins to centralized stablecoins to holding hedges, this article combines underlying logic, actual data, and case studies to bring you the most comprehensive guide to stablecoin decoupling emergency escape.

Decentralized stablecoin

The core purpose of an emergency escape is to reduce risk at the lowest cost and to provide a window of time for subsequent action and judgment. Therefore, in addition to considering the long-term logic, it is more important that it can be linked in the short term, so next we will classify it according to the different hook mechanisms.

A. PSM By supporting direct convertibility to other stablecoins, such as DAI supporting 1: 1 value for the USDC/USDP

So since both are 1: 1 exchange, why did Brother Sun change USDC into DAI? Actually, there are benefits

There is a limit to the PSM limit, and when the limit is reached, it becomes a one-way conversion, that is, only DAI USDC, but not USDC DAI, and the one-way conversion becomes DAI> = USDC

If USDC can only be converted to USD at 0.98 at the end, makerDAO may eat this part of debt in order to re-peg

If the situation worsens and the market crashes, triggering mass repayment and liquidation of borrowers, then the need to buy back. DAI To pay off the debt, driving up the price of DAI

That is to say, in the short term, this is basically a steady business, and can accommodate large funds, so naturally get Sun brother pro lai. In fact, makerDAO passed an emergency bill on 3/11 to increase the cost of USDCDAI, and because of it, PSM-USDC At the ceiling, DAI also traded at a premium of about 2% to USDC for a short time. This escape route is not completely free from the influence of USDC. The main benefits are large capital capacity and strong short-term certainty.

B. AMO: Open market price interventions, such as FRAX/ crvUSD, etc

For example, most of the underlying assets of FRAX are Curve AMO, namely Curve FRAX/USDC LP and other assets. In FRAX < 1, withdraw FRAX from the FRAX/USDC pool, that is, buy FRAX in disguise to support the currency price; FRAX> When 1, additional FRAX injection was issued to sell FRAX in a disguised way to suppress the currency price.

Why is FRAX de-peg this time? Because it is ultimately dependent on external assets to peg, the USDC de-peg, what does the FRAX/USDC reserve support? Therefore, FRAX is fine when something goes wrong with UST, but if something goes wrong with USDC/USDT/DAI at the bottom of AMO, FRAX will also be affected.

Therefore, to use the AMO mechanism of stable coins escape, it is necessary to make sure that there is no problem with the underlying assets of AMO, suitable for people who are very clear about the internal situation of the currency.

C. Debt/collateral pricing exchange: Luna/UST two-way switch, LUSDETH one-way switch

LUSD is an excess mortgage stablecoin. The mortgage only supports ETH and is characterized by a pure word.

LUSD has never been significant in the long run since its release. 1, but frequently » 1 Why is that? Because it provides that 1 LUSD can press $ The price of 1 is exchanged for ETH as collateral after a certain rate is paid. Yes, press $ with UST; 1 for Luna is similar, but you can't press $ directly for ETH; 1 change the LUSD Of. In this way, in the case of LUSD $ 1* (1- rate %) when there is a very certain arbitrage space, plus the mortgage for pure ETH risk is relatively low, borrowers do not expect the price to fall further, in time to carry out arbitrage. peg Yes.

As for why it is always greater than 1, it is because when ETH price falls, many of them are forced to buy back LUSD to pay off debts and push up the price. You could say that this is a good arbitrage for somebody to lend LUSD and then sell it, but when is the price of LUSD going to go down? There is no fixed time for this profit to fall into the pocket, and bear market liquidation risk is large, naturally also become a long-term premium situation. What is the upper limit? As the LUSD limit mortgage rate is 110%. That is, you can use the value $ 110 ETH lends 100 LUSD, if lusd. $ 1.1, then definite immediate arbitrage opportunities appear, so the upper limit is $ 1.1 & have spent .

So for small and medium amount of money, if you can use the = Buying LUSD at 1 is a better escape plan. Of course, there is no way to deal with a pile of bad debts in an extreme market, but relatively speaking, LUSD is a good choice.

D. Hook up with the fate: In short, it has hook logic but is not strong

For example, MIM and other excess mortgage stable coins without PSM, its principle is that the price is lower than $ At 1, the borrower can buy the MIM cheaply to repay and then withdraw the collateral to realize arbitrage.

Yeah, that's true, but what if the borrower thinks your dollar is going to keep going down or won't go up for a while? Since MIM collateral supports many complex products, such as Curve LP/GLP, etc., the risk is greater, and the lack of confidence in the bear market will naturally lead to long-term decoupling.

This path has been trodden before by DAI and proved impossible to hook. Considering that most of these products in order to make differentiation and increase the application scenario and DAI/ LUSD, generally increased the risk of higher collateral, not suitable for emergency escape, easy to jump into another pit.

Centralized stablecoin

Centralised stablecoins rely on US dollar reserve assets to peg the dollar, so they should be analyzed in terms of reserve assets. The security of reserve assets from high to low is: national debt = national debt reverse repo > Cash (bank deposits) > Low quality assets (commercial paper/corporate bonds, etc.) In addition, bonds have the concept of maturity time, which simply means that the shorter the maturity time, the better the liquidity.

According to the analysis of the underlying assets of BUSD/USDC/USDT in the following two tweets, we can see that from the perspective of comprehensive safety and liquidity, BUSD> USDC > USDT. But USDT also has the benefits of time-tested and "opacity," while BUSD is a thorn in the side of U.S. regulators.

In addition, there are also USDP/ GUSD, etc. which are relatively small, and the principle is the same. This time, after they declare that they have no exposure to Silicon Valley banks, the risk is naturally smaller. However, it must be noted that a large area of bank problems will inevitably affect the central stablecoin, this problem does not mean that the next problem.

Under the current circumstances, Treasury bonds and reverse repos account for a larger proportion of the more plausible. If you still want to hold dollar assets, don't overthink the risk advice of short-term US Treasuries, because this is the highest level of safety of dollar assets, consider this is better to switch back to the yuan.

稳定币脱钩紧急逃生指南：为下一次危机做好准备

Tweet links: https://twitter.com/NintendoDoomed/status/1597583155946323968? s= 20

稳定币脱钩紧急逃生指南：为下一次危机做好准备

Tweet links: https://twitter.com/NintendoDoomed/status/1625076182550208512? s= 20

Hold money + short hedge

Buy 1 ETH spot then contract short. ETH looks great but here's the problem:

You need to trust the platform. The platform has a lot of money in stablecoins. UXD on Solana used to have a sol short on perp dex Mango. sol, Mango was unfortunately hacked...

If you have an empty ETH/USDT trade pair, then you are essentially holding USDT, and an empty ETH/BUSD is holding BUSD, and eventually circling back.

But if it's a coin-based contract, like Binance. Index The price is taken from the real USD trading pair, which seems to be a feasible plan.

Note that the dollar-based contract is denominated in dollars, which means you can't short 1 BTC, only $ 10000 BTC, unable to maintain full hedging in the event of large price fluctuations. This foreign currency standard contract we are generally not familiar with, it is suggested that after practical verification of the big action.

summarize

From the above mentioned schemes you can find the most suitable escape route for yourself according to your own situation, but any indirect holding of dollars in the currency circle is an extra risk scheme. The safest way to hold dollar assets is to buy US Treasuries. See the following tweet for the correct position. If you are a qualified investor with more money, you can also come to Miaowa Seed. My friend Pikachu can provide you with the exclusive high-quality American debt service Meow.

稳定币脱钩紧急逃生指南：为下一次危机做好准备