fUSDv2 underlying assets and their ratios

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Based on the VIP-7 (VIP-7: Proposal to deploy an upgraded Fuse stablecoin) we would like to start a discussion regarding the assets fUSDv2 will be backed by.

We will start with proposing the usual, bluechip stablecoins as collateral; BUSD, USDT and USDC in a ratio as follows:

  • BUSD 1/3
  • USDT 1/3
  • USDC 1/3

What stablecoins do you suggest as collateral, and in what ratio?

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Can we get DAI and oneFUSE in there as well?

DAI is backed by actual collateral as compared to… well… all 3 of the above. Plus it is very battle-tested compared to newer coins. And, it is not freezeable like USDC or USDT. One thing to note is that a lot of DAI is backed by USDC, so perhaps DAI can replace USDC’s portion or at least some of it’s share.

I’m not sure if oneFUSE is freezeable, and indeed it’s not very old (so not very battle-tested) but it can help build awareness and cross-usership with ICHI users

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Tho DAI is a bluechip, it’s indirectly freezeable because DAI = USDC.
But ok, Circle is owned by BlackRock so i’m pretty sure they won’t let USDC fail.

The "one " tokens created by the ICHI team are interesting, i would not use them as collateral.

I personally like FRAX and think it’s going to take a huge portion of the stablecoin markets once frxETH is out, and Fraxlend fully developed.

Other stablecoins i like are LUSD (overcollateralized by ETH) and MAI.

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Fuse Network is on the mission to create a bank-less system of payment for all, through a decentralized non-custodial system.
DAI represents that spirit by being a decentralized stable-coin

" Dai has a number of compelling use cases across the crypto ecosystem, and is an invaluable tool for savings (that cannot be seized), 24/7 instant international remittance, and financial transparency."

Not all stable-coins are created equal. (pun intended? :thinking:)
"USDT has a 1:1 peg with the US dollar and is allegedly backed by a wide array of collateral reserves, including cash, commercial paper and commodities. "

  • i feel ‘commercial paper’ needs some clarification
    OF the collateral backing USDT, “Within that 75% of liquid assets though, only 3.87% is actually listed as cash, whereas 65% of the total is made up rather vaguely of “commercial paper,” which are basically IOU notes made between financial institutions.”

USDT has been under scrutiny for its lack of transparency about what it’s actual backing assets are.

USDC : “Circle claims that each USDC is backed by a dollar held in reserve, or by other “approved investments”, though these are not detailed. The wording on the Circle website changed from the previous “backed by US dollars” to “backed by fully reserved assets” in June 2021” " USDC reserves are regularly attested (but not audited)"

  • i think it is import to understand what Circle is all about and trying to accomplish, i found the following video very informative.

BUSD “is pegged to the U.S. Dollar and is regulated and approved by NYDFS " (The New York State Department of Financial Services)
" BUSD also has monthly attestations to prove that they have an equivalent amount of USD backing their USDC to assure investors that they are fully backed.”

I Feel it is important for us all to understand what each stable-coin represents, and how it fits into crypto as a whole. When we choose one or all of these coins to back the new FUSD, we are essentially saying that as a community we are agreeing with the policies and practices of said coins.

I feel that both DAI and BUSD should play a major role in the new FUSD, as they are both transparent in what they are backed by, with an emphasis on DAI as it is more inline with the fundamental notion of decentralization

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FRAX was mentioned by @Elvis.Voltage above.
Under the assumption that some ppl like me are not familiar with FRAX. i am posting some links so we can all learn together why FRAX stable-coin might be a viable option to add to the ‘basket’ of stables we choose to back FSUDv2
(caution: there is much to read here. get a beverage and something to eat before proceeding :wink:)

I like the idea that this is another Stable-coin that is truly decentralized
"FRAX’s algorithmic stablecoin features automation that fractionally returns the FRAX price to $1 – ultimately ensuring the $1 value is maintained regardless of market action/swings. FRAX has maintained the peg since its inception in December 2020. "

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I will give my point of view, I know that some will not agree and others may agree. but it does not make much sense to add a stablecoin to create another one in that case we should only keep the existing ones like usdc usdt dai busd etc now if there was a reason like for example how tron did with a stablecoin that it calls jusd of which Every 1 jusd is backed by tron and if for example tron goes down, people have to add more tron to maintain parity with the jusd. my opinion is the following why not add usdc usdt dai and why not volt as collateralization to fusd a mix of stableoin with the volt token this is to give a utility to our governance token. (the one to add stablecoin is only because the majority want it and because volt does not have as much capitalization yet)

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Having more stablecoins as collateral is a good thing in case one depegs. What if fUSD remains being backed by USDC 1:1 and USDC depegs?
For reference check RSR.
There’s a reason top tier stablecoin protocols collateralize their stablecoins with multi-asset strategies.

I would not take Tron into consideration in regards to this topic because of its CEOs shady actions in the past.

Adding Volt as collateral would be a very dangerous move, and i don’t suggest that even the slightest. Reasons; volatilty, proneness to manipulation due its small marketcap etc.
And if any asset is to be used to partly collateralize a stablecoin, then it could only be either BTC or ETH. Every other asset comes with way higher risk propositions.

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Although i like the idea of giving volt some other utility besides staking, i have to agree with @Elvis.Voltage on this. The volatility of volt makes it too risky of an asset to include in the ‘basket’. :thinking: Maybe we need start a new tread about possible utilities for volt. oh and welcome to the forum @josead11 :smiley:

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ok I understand. In that case I recommend adding Dai Busd and USDC is the most recommended

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11

Since Binance will stop supporting BUSD in February 2024, I consider it important to update fUSDv2, eliminating BUSD as a support currency, I suggest using DAI instead, I also think that overcollateralizing fUSDv2 should be discussed, in case any of the support currencies lose their parity with the dollar.

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Thank you for your insightful feedback. The Voltage Finance team is well aware of the upcoming changes with Binance and BUSD. We’ve already initiated discussions on potential alternatives. Rest assured, communication will follow as we plan the migration of fUSD to replace BUSD.

DAI is indeed on our radar as a strong option. We appreciate your engagement and commitment to the community’s growth and stability.

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What Stablecoin should replace BUSD?

  • DAI
  • FRAX
  • Other
0 voters