So you don’t think the community can come up with alternative ways to spend a billion dollars to further the ecosystem?
Apparently all 7-8 figure depositors will make their way to this thread to create an illusion that this is the best use of the capital.
First of all, this is one of the best ways to spend a billion dollars to further the ecosystem. Increasing capacity to allow people to safely buy protection for the capital they’re investing naturally brings in higher amounts of investment as people will be less risk-averse. This can be seen by the strong demand from institutions and retail investors wanting to enter the space/ecosystem but are hesitant due to insufficient capacity. And they’re looking to come in with 9+ figures.
Another very important focus that I don’t think people are picking up on is developer onboarding, as is mentioned in the proposal above. I believe that Ozone will play an instrumental role in onboarding high quality developers as projects can build on top of Ozone while the Ozone team builds the necessary infrastructure required, that is not available on Terra today, which not only onboards but retains long-term talent. We need the best people coming here and staying here. And coming from an engineering background myself, I can say that the engineering bar on Terra has been low.
The way I see it, the $1bln bootstrapping fund is used to achieve price discovery of the lowest marginal premium cost for insurance.
As I understand the Risk Harbor protocol, Ozone V1 would require premiums to be adjusted over time to find the balance. The higher the underwriting capacity, the lower the eventual premium. Tranches could be used to manage residual smart contract risks (noting these have been in the wild for over a year). An alternative may be to deploy separate underwriting vaults?
I’d like more details on the use of the Automated Market Maker for Ozone V2. I presume this would automate the price discovery process to achieve the lowest marginal premium. Again, the larger the underwriting capacity, the better?
I’m just one of the little guys here with some savings in Anchor, looking for some insurance. From most of the posts so far it seems that whatever the amount that is agreed on, the capacity will be gobbled up by the large investors/hedge funds within minutes leaving us small individuals with no chance yet again.
Reminds me of trying to buy a decent concert ticket online - you wait patiently for the sale to begin, and then surprise, surprise all the best seats have gone within 3 seconds.
This is a proposal that has been highly anticipated from the Luna community and Risk Harbor users. Since RH launched Ozone, most of the request from the community has been to increase the capacity to allow more deposits to be insured. RH is now proposing using $1b to further increase the capacity and this is a HARD YES from me as well.
Since joining their community, they have been nothing but excellent insurance providers and I am not sure that comparing them to anchor and other DeFi insurance products is fair considering their payout method. As Spreek mentionned capital efficiency is another major part of RH evolution.
I also believe that this is one of the best use of capital a community could do. Not every day you have the opportunity to deploy $1b in an insurance fund. And yes 30% of community funds might seem like a lot but this is to bootstrap further growth into one of the fastest growing ecosystem. It isn’t that much when looking at the problem RH is solving. Without this $1b in protection the big boys are not going to show up. Now imagine the hedge funds & other big players of crypto all moving to Terra because there’s top quality insurance there, imagine the push in products and services on Terra. This won’t happen at the same pace or with the same level of robustness if the big players are elsewhere, this proposal solves the problem of the chicken or the egg. We all know that without secure products the bigger funds are not going to deposit in Terra.
One last thing not really related to the proposal, but when looking at major companies in the world Insurance providers are top of the class in term of capital use. Looking at any major downtown areas, most of the buildings have insurance company names on them, or banks. It’s a bit surprising to me that some of the community would want out of an opportunity like the one provided by RH, but at the end of the day I am simply a voice like yours.
I would be extremely warry of this proposal as there are major red flags about RH. First of all there is no proper risk models or cost calculations presented to justify the amount 1 billion UST.
They request 1 billion UST without explaining how they even came up with this figure. They haven’t presented a proper cost calculation, statistical risk models, or even key risk metrics like LGD, EAD, VaR, PD, CVaR.
They also haven’t presented a future plan on how risk metrics like VaR and MVaR will be adjusted when Anchor 2.0 allows more assets to be used as collateral.
Their whitepaper also doesn’t even properly explain how their risk metrics even work and how the risk engine acts in different scenarios. There a lot of red flag about the entire team.
RH team go do your homework first, hire some actual risk managers that can actually come up with a valid cost calculation and statistical risk models to justify this arbitrary sum of 1 billion you randomly made up.
This is a clear NO from me.
For the record, those who have been critical including myself are not saying that we want out, we simply want better terms, more accountability, etc.
Bluntly it sounds like those who are staunchly in favor are just thinking: $4B UST is minted and Luna moons, so it’s a win. Yes, that would be great. I don’t think it will play out precisely like that… and I don’t think it should be so “Easy,” to have access to $1billion in one go. The token allocation isn’t as important to me, but given that they get access in one go (as it currently stands) then I think this 10% allocation is meager.
I for one am a HARD YES and encourage others to vote in favor as well.
This is such a no brainer for the community and we have been waiting so long for Ozone. Let’s remember they built the beta version in 1 month or so and built a novel high quality product at that. If there’s someone else out there on Terra I’d like to see them step forward but it’s obvious there isn’t. We need freaking shippers on Terra that can execute and I have full faith in Do for standing behind this. He’s always thinking ahead.
I also believe that for Arrington, the other institutions and apps they have planned are critical to accommodate in volume so believe the 1B is more than justified. I can already think of the different credit desks that require Ozone to participate more in Terra. This not only about Anchor but the entire market. We need to be aggressive in capturing the market.
As confirmed above, this is not a token sale and the reason why we created this fund was to bootstrap underwriting liquidity for Ozone. Large purchasers of protection like myself benefit from Ozone and i have been waiting nearly 1 year for this.
Excited to see what they build for the rest of the community.
I dont understand why it has to be $1B from the start. If Risk Harbor has the demand they are asking for, why not start with $100M. Once this is filled, request more money from the community.
This is how it normally works in the startup world. You raise money in phases, but in order to get this money you have to prove you deserve it.
They’ve proven there is at least $10M of demand. Now prove there is $100M of demand.
I have yet to see proof that there is $1B worth of demand.
I don’t really see the downsides to this. It’s a win win for both Risk harbor and the community. Risk Harbor gets some cash to grow, and there is less risk for the community.
I agree with @Barfaroni that we are making it wayyyy to easy to get access to $1B.
We are lucky to not have you in a leadership role. I’m genuinely starting to feel bad for the team as those purposely spreading fud are failing to look at any of the facts. You mention fundraising but this isn’t a sale of tokens, this is underwriting provision provided for the community. They aren’t spending this anywhere else and we need to encourage additional growth in the ecosystem.
Beginning to seriously believe Hugh Karp and his team have infested the thread… for once take a step back and look at the rational facts.
@tooney lots to unpack here - but congrats, and welcome to the community.
It seems like no one is challenging the benefit of risk harbor - instead the cost of the program.
$1B is gargantuan, and will be difficult to convince the community overnight.
Is there a middle ground the community can meet you at? Or can you better describe the justification for this amount and how it will be allocated?
I will end by raising this quote:
If Ozone can demonstrate onboarding new funds and users to the network, upwards of X% of the total cost of the program it feels like a benign cause.
Have you done any modeling to see at what level the 100% utilization rate drops off?
@Deciple_of_Do did some digging as I really was curious about this PhaseDAO project that nobody seems to have heard of. Don’t you think it was of the highest importance to state your bias here? This discord message is from the admin/founder of PhaseDAO:
It appears that you were the first person to spread the “insiders of risk harbor valuing the company at 10B” fud where:
In conclusion, it seems like you’re trying to fud the proposal because you know if this passes then PhaseDAO which you’re obviously involved in, if not an admin, will likely not exist. It seems like the strategy here was to poison the proposal that we’ve all been waiting for in exchange for personal gain. This was very opportunistic and a terrible way for you to try to promote your project at the demise of an already credible one. This is a malicious anti-community effort that should not be tolerated.
More details on the AMM are available in the Risk Harbor v2 whitepaper
This makes a lot of sense! Honestly, not surprised. As I mentioned in my post, the language being used in many of these comments sounded like it was from Ozone competitors. The reality is that the Terra community has been waiting for Ozone as THE protection provider and not other protocols.
Also, as I mentioned earlier, Ozone is clearly a better product fundamentally than any other options out there. If people don’t think it scales – which it 100% does and more than any other protocol – than clearly they haven’t read their whitepaper and are making statements based on ignorance and nothing else.
This forum is supposed to be a place of integrity, honesty, and discussion. Throwing around false information that has no basis is not fair and I genuinely feel for the RH team. Totally not cool. As I mentioned earlier, any practical and reasonable person would know that this proposal is good for Terra as everyone has been waiting for this.
I’m on my honeymoon in Hawaii right now but this is so important I felt compelled to respond when this thread was brought to my attention.
Ozone is the most important initiative in the entire Terra ecosystem by far. Full stop. Not Mars. Not astroport. Not any crazy defi yieldderivwtive product. But insurance. That’s the killer use case.
At Kash DeFi we regularly have talked to institutions on almost a weekly basis about our product, with some clients looking to put more than $100 million into Anchor. The #1 question everyone has is insurance. We’re waiting for this. We need it.
Once Kash Treasury is out for institutions we will need $1 billion+ in insurance coverage ourselves.
Let me repeat: we will demand more than$1 billion from Ozone ourselves. Without Ozone there is no Kash Treasury.
These words are coming directly from the source: Me.
I’ve had many conversations with the Ozone team. We’re both Wharton alum. I can vouch for the teams technical credibility when our architects evaluated their product. They have my full support for whatever they need. I will put my reputation on the line for this. Ozone isn’t perfect, and the offering will evolve. We spent 40+ minutes publicly analyzing Ozone in a YouTube video here. Terralytics Today: In-Depth Discussion On Ozone + Crypto Insurance - YouTube
With that said, it’s superior to what exists today and we need to support it. Honestly I’ve read a lot of trash ideas on agora. I’ve read some cute ones. Some fun ones. This is none of those. This is necessary for USTs growth as the #1 stablecoin.
This is a vote that matters.
Let’s make this happen. Let’s vote and change the world.
The proposal is a joke.
The RH teams comes in demanding 1 billion worth of UST without any data or models to back this sum up. How did they even come up with this sum? Can we see a proper PROFESSIONAL cost calculation? How about some statistical risk models to justify such a huge sum?
How are we supposed to trust that this protocol will insure over 11 billion UST worth of assets that currently Anchor holds, when the team can’t even come up with a professional cost calculation and just arbitrary demands 1 billion UST?
And if that wasn’t even bad enough they come in and try to bribe users.
Are we seriously going to hand over 1/3 of the treasury ($ 1 billion) to some risk management protocol that can’t even come up with a proper cost calculation, statistical models, risk metrics(VaR, EAD, LGD, EL, CVaR etc), or SWAT analysis?
The era where some random team could make a quick billion dollars is done. No more ICOs/crypto teams raising billions of dollars and doing half-assed(excuse my language) things. This isn’t 2017 ICO bubble era anymore.
We have several different risk models. In fact, I just got out of a meeting with one of our research engineers in which we discussed the progress of the newest iteration of our risk engine which uses convergence of a sequence of structural Monte Carlo simulations.
Just because you use acronyms like VaR and EAD doesn’t mean you actually know what you are talking about. Anybody who has ever done risk management at a financial institution/insurance fund understands that risk management is about law of large numbers and correlations between loss events. We built Ozone v1 as an overcolateralized solution for providing protection on Anchor alone so looking at the aggregate effects of possibly correlated random variables on exposure (which is what actual risk managers do btw) doesn’t really make sense.
To respond to the question of how we derived the 1 billion$ number number, that was based on the demand that we saw through various meetings with several large institutional buyers. Other folks have corroborated this elsewhere in this thread. If you think that it is possible to underwrite 1b of potential exposure with less than 1b of underwriting capital when that exposure rests entirely on one weighted coin flip then you are just wrong.
If anyone is actually interested in the types of loss events that can happen on lending markets, the literature from gauntlet on Compound and AAVE is pretty illustrative. The main takeaway for this discussion is that lending protocol failure is similar to a bank run in that its all or nothing. Either you can get the full value of your funds out or you can’t. The same holds for Anchor. This motivates the >= 1:1 collateral ratio in Ozone v1.
Actually I do know what am talking about because I work as a credit portfolio risk manager at a financial institution.
You haven’t come up with proper statistical risk models or a proper professional cost calculation to justify this sum. Where is the proper economic analysis of this proposal that breaks down where, how and why this allocation of $1 billion will benefit every LUNA holder? Where is the SWAT analysis to the entire proposal?
And you came up with this sum because of “institutional demand”? Can we see the legally binding contracts that guarantee that institutions are willing to allocate this much capital or did you just have a zoom meeting with these institutions and they verbally said “yea sure we will allocate X amount of capital”, which is totally not legally binding? Don’t they teach business and corporate law anymore at Wharton?
Having a proper impartial insurance product will bootstrap the Terra eco system, this is what the community fund was intended to be used for, and will benefit LUNA holders.
Other protocols joining this discussion is ofcourse warranted but some of these comments definitely feels like coordinated fud for their own benefit.
This is a weak proposal imo! The 1B should have been devoted to UST peg protection which is what the community wants! We dont care about institutions joining on the earn side we’re not even profitable and have been draining reserves for mounths what’s the point? I mean 1B for anchor smart contract failure ?? Did I miss something? This is obviously an overkill please community abstain until we get a better proposal !!
