hey [RedlineDrifter]
can you please regularly update on the progress of this prop? now the proposal has been passed, whats the next step?
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@RedlineDrifter
Maybe thereâs too many message for you to read and you missed this.
Let me simplify my questions
Who will be the one buying off peg knowing they will getting cut?
If you yourself wonât, why will others?
How will this prop NOT killing the volume ( as you claimed, by what assumption ) and how can you accumulate fund by charging the ones trading off peg without volume?
There is also a high risk of getting de(listed by CEXs with low trading volume, do you agree this risk has to be addressed?
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Redline explaining and answering questions
The problem is greedy people canât see anything increased fees or tax.
Lets say you trade USTC and it does nothingâŚjust sits there at 2c you make no money you pays a few fees walks away disappointed.
Now letâs say you gotta a pay a tax or whatever you want to call it. People start buying price movesâŚyou will pay a fee for selling but now itâs at 4c and you pay a 1c fee.
People are overly worried about volume when letâs be serious itâs shit anyways. Price on LUNC is shit. Volume is down on LUNC after our tax reduction. We had more volume at 1.2%.
All the community does is argue and try to 1up or counter propose another team.
A signalling proposal has passed and everyone is jumping on dicks âwhen moonâ âwhen repegâ âwhys it not happening yetâ âare you even workingâ âI can do betterâ itâs been f****** days give it a bloody chance.
Iâm still pissed the 1.2% only had a few weeks before everyone went nuts all pulling in different directions.
Lets put it down now. This proposal could take months. Let redline do what he said he would and revisit each month for an update. Stop the infighting it makes the chain look stupid.
Work togetherâŚlike legion in red dwarf.
Profit of something with bigger fees is better than nothing and smaller fees. But just calm down and give it some time.
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Sorru, I must have missed that.
Well thatâs part of the reason for the savings module, you can buy USTC under peg, lock it up. And while the price is depegged the rewards pool is filling so your yield is increasing. Sell them again at peg. Not only have you profited the margin but you have the savings yield too.
Itâs only initially that this will be an issue, over time as collateral builds, the protocol buybacks will be maintaining the peg.
Well no if you look at the table above even with a 90% drop in trading volume below peg, weâre still making considerable profits and can give the exchanges more than what they would have earned. So the CEXs make more money even with significantly reduced volume, so no need to de list. While the trading volume below peg would be significantly reduced, the trading volume will most likely move to peg levels or above where there no restriction to trade.
So weâve already had something similar to this with the Tobin Tax and it didnât massively reduce trading.
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I think while you implement this proposal it would be better for the community to find solutions to burning LUNC instead of attacking your plan at every point.
Turn on any influencer burn, burn, burn. Shib burn, terraport, cremation etc etc.
There are some super smart people here but even an idiot like me can see where the price action comes from. Too busy being smart quibbling semantics to see whatâs right in front of them.
Sometimes it take simple eyes to see simple solutions. As a salesman I know whatâs selling a coin with astronomical supply, the fact it will and is being reduced. Can you imagine burning 10b in week? People would shit the bed!
Anyhow do your thing redline I look forward to updates etc over the next few months. Itâs probably best not to engage too much here itâs probably gonna slow you down.
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Just to avoid duplication, above linked to earlier reply.
If I understand Divergence protocol correctly, it only generate collateral when trading below peg before we return to $1? This may held the price up, but majority volume will not generate the funds for collateral, it will takes so long for collateral to build up especially minimal volume will be trading below peg.
The time with most restriction to trade will be at extreme price swings or below peg, time periods that usually seller > buyer, and without sufficient buyers, there will be liquidity problem as seller will pile up at peg price.
There is only âprofitâ to share when enough volume is traded below peg, when traded at or above peg, these volume will not generate funds right?
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Hi ! While waiting for redline, take a look at the scenarios as descibed in de prop, there is also a fee above peg 
Also still recommend the q/a video I posted above since these questions are being talked about
He doesnât understand why the exchanges wonât even consider this.
The moment they apply this tax, they are gonna lose 100% of their USTC customers.
People go exchanges to TRADE. Not to hold.
Thatâs why they wonât do it.
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I personally only hold and never take short/medium term trades. Not saying that people donât trade but there will be a percentage of traders that doesnât care about the fees as much.
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This is probably the weirdest definition of trading that I have heard in my life, and I cannot help it but say that you must be tr(o)lling me.
Cause YouTubers and Influencers are continuously telling everyone not to keep their money in hot wallets unless absolutely required for trading and what you are saying is that you are happy doing exactly that? 
Cheers!
Funds are #SAFU
P.S. You are actually coming here and sharing this knowledge so that others can also do this absolutely dang(erous thing of keeping your funds in a cex. Man, oh man.
Where was i saying that i was holding the funds in a hot wallet? You are putting words in my mouth I didnât say. Holding to me is not the same as trading, but you said yourself: âPeople go exchanges to TRADE. Not to hold.â So what about my definition is weird?
Yes because I was talking about exchanges and the very next commentâs first sentence is:
I do not think I am the one missing the context.
I think you have not explained yourself properly then.
Cause this entire thread is about exchanges - CENTRALISED exchanges.
If you havenât realized yet, Drifter has been organizing meetings for us with Binance and KuCoin 
If i was holding in a hot wallet, I would have said: âI am holding in a hot walletâ, or âI am holding my funds in an exchangeâ. You might say that I havenât explained myself properly, but there is nothing I have to explain as hot or cold wallets were never the topic of discussion to begin with.
My family holds in exchanges, 6 of them.
The divergence protocol in itself is a defence mechanism. If tokens are traded at or slightly above peg we donât build collateral thats correct. But if it does this we have a stablecoin at $0.025 and dApps can use it. Thereâs a misconception that stablecoins need to be at $1, but thatâs not the case, whether the price is $1 or $0.01 if the price is stable, it can be utilised.
As for not using a peg and just using a collateralization level, thereâs no real defence mechanism in this case. There nothing in the CP worth talking about as a peg defence and thereâs a risk people will dum p to the collateral level. I did actually look at this but unless we had an external Liquidity Provider Iâm not sure how feasible it is.
I just took a quick look at your proposal. With the arbitrage opportunities you are creating, where does the capital come for this? Creating that arbitrage opportunity comes at a cost. And where do we find the funds to provide it? Do we risk draining the already low CP? I do like the idea alright just the funding of it is an issue.
The lack of any collateral is our biggest issue. With the protocol more depegs/bigger the depeg we have, the stronger the system gets. And this approach puts a hard limit on how far the price can drop. I suppose the way I look at it is weâre either building collateral or the price is stable and can be utilised. Both scenarios are a massive improvement on what we have now.
@arunadaybasu How will the CEXs lose their customers? Where will they send their USTC? This is addressed in my proposal. The Protocol hits all markets and any that donât implement get blacklisted. Youâll literally be only able to trade USTC on markets with the protocol implemented. So thereâs no way to avoid it. Blacklists protects both us and the CEXs. And the LUNC arbitrage opportunity will increase volume both on and off chain.
At the end of the day most capital control measures are rendered completely useless if they are ineffective offchain or thereâs a way to avoid them. Our money should be under our control. If itâs not weâre just leaving ourselves wide open to similar market manipulations like last May.
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Your family should not.
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Something we can agree on 
Ya itâs not a good practice to leave all your funds on exchanges. Sure leave some there for trading, but if itâs just sitting there you might as well Stake it. Itâs safer and you get passive income. Itâs also a good idea to split your funds into multiple wallets and have a separate wallet for interacting with dApps.
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I agree divergence protocol is a defense mechanism and stable coin do not necessarily need to be $1 for dapps to work.
The point of using collateralize level over a peg is that funds used to collateralize can be seen on chain and thereâs actually something backing USTC, the fund used to back USTC can be used to buyback USTC at a discount ( e.g. $0.20 ) vs the assets used to back a USTC ( e.g. $0.25 ) that holder of USTC can redeem when trading below collateralized value.
I disagree that going for a collateralization level approach will lead to people dum ping USTC. The current state of USTC is without collateral and most forces that held the price up is peopleâs hope / speculation for USTC to build back to $1, these type of âpremiumâ is hard to quantify and the more steady approach would be building collateral for collateralizing USTC from ZERO ( $0, as currently there is no fund set aside as USTC collateral fund ), funds that can be quantify and checked on chain, transparent for everyone to see the funds are there to back USTC, and a solid support where collateral funds can be the buyer in the market, instead of a stated peg relying on market demand alone for sufficient buyers.
The proposed capital is from CP, we are not going anywhere if we cannot find a way to increase funds we can spend in a sustainable way. Figures in proposal is for illustration and discussion purpose, amount for initial and continuous contribution is up to community to decide how much are we risking, starting small / large will still yield the same %.
Continuous contribution will maximize compounding effect to earn CP more interest but without this, funds put in liquidity pool will still be able to earn the swap fees and take advantage of volatile price movements of LUNC & USTC â providing more arbitrage opportunities to traders.
My proposal do not use CP actively to incentivize ( subsidize ) traders to trade, but rather passively by price difference for LUNC & USTC on CEXs vs liquidity pools on chain.
You can say the cost for this would be the risk CP take on for providing the liquidity in liquidity pools and price movement differences between LUNC & USTC that incur impermanent loss ( gaining less compared to holding neglecting swap fees earned ). Please refer below quote for details:
In the case of price moving higher and lower and return to where it is at, currently we will gain nothing and still have the same amount of asset, while putting in liquidity pool will earn you the swap fees during these times and the same amount of asset will still be here.
Minimizing slippage also have the pros of adding liquidity on chain, which have the potential to increase transactions on chain â increasing the tax proceed.
CP will shrink by necessary daily operation and infrastructure expenses, thatâs why my proposal suggested a way to bring in a sustainable income stream, in search of more income for CP.
The main risk for providing liquidity in liquidity pool is that the assets ( LUNC & USTC ) put in liquidity pool decreases in price in the long run ( 3+ years ), which we assumed the asset will not decrease in price over time as more buildings and utilities coming back. Therefore this should not be a concern for CP to be a long term liquidity provider.
I think divergence protocol can work without CEXâs support IF we have sufficient collateral fully collateralizing USTC, which holders of USTC can redeem their USTC for collateral, the redeemed USTC will be burned and removed from circulation, causing no dilution to collateral per USTC. Although then divergence protocol will not be needed for defending the peg as the additional demand for USTC created by the arbitrage opportunity ( Discounted USTC vs underlying collateral backing USTC ) will give market participants incentive to bring itself back to peg. It will become more like a safeguard feature when price movement exceed certain movement.
And we are back to square one of earning the funds to collateralize USTC. Should the focus be put on earning and accumulating funds for collateralizing USTC than providing a floor for USTC be more effective for repeging USTC?
I understand dapps need a stable USTC to work with, but what divergence protocol provides is a false stability without sufficient collateral and when extreme market condition hits, insufficient buyers for USTC will get sellers pile up at peg and market confidence for flowing in and out USTC freely at peg will be lost, which I do not think the protocol can buy enough time for collateral to build up in time to avoid this situation given that no one will be willing to get cut and trade below stated peg at normal times.
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