I am getting to understand more of your proposal. A quick question . Will your proposal require any form of liquidity?
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If implemented is there anyway that this can be exploited to make it fail?
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Duncan, what would it take to get the ball rolling on this and implement it? Does it have to be on the test net first before it can go to mainnet? do we need to provide capital to get it movign forward?
Code has to be written then put on testnet, mainnet, or a sidechain. On testnets, you can establish a faucet which sends out tokens. Perhaps there is a way to incentivize users to come and break the functionality before it is live on mainnet.
I am getting to understand more of your proposal. A quick question . Will your proposal require any form of liquidity?
Not through any direct injection. However, there must be âsomethingâ that fills the hole. So, the arbitrage mechanism is simply being incentivized further than it already is. These are the core users right now and the only ones doing significant volume on-chain and on Binance. This is adding fuel to the fire thatâs already going, so to speak.
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The reason for opposing this proposal is not only market manipulation. I promise It will not working. but even if the repeg is successful, it is a proposal that does not care any future risks. All investors withdraw money from USTC (bankrun) and still has the weaknesses of the previous UST. If the car was totally wrecked in an accident, itâs normal to buy a new car. Because too dangerous to repair and drive again.
The reason for opposing this proposal is not only market manipulation. I promise It will not working. but even if the repeg is successful, it is a proposal that does not care any future risks. All investors withdraw money from USTC (bankrun) and still has the weaknesses of the previous UST. If the car was totally wrecked in an accident, itâs normal to buy a new car. Because too dangerous to repair and drive again.
Your car analogy reads like: our car didnât work, so we will never make cars again. As well all know, that never happened in recalls.
Just be aware re: market manipulation, making tax changes or changing gas fees manually were already in that category. If I say âall users must pay 5x more fees because we said so,â then itâs really no different. Youâve just put the risk on persons who may or may not know how monetary policy works and so you accept all consequences of such proposals.
Food for thought, brotha.
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it is impossible to create a 100% protected algorithm against manipulation.
But, There is a combination of solutions to handle manipulation.
- Using multiple oracles to provide exchange rate data reduces the risk of manipulation by a single oracle.
- Implementing a mechanism to detect and prevent manipulation, such as monitoring large or suspicious trades and using smart contract-based rules to limit or flag them.
- Using market-based solutions, such as adjusting the supply of the stablecoin through buyback and burn mechanisms, to maintain its peg to the target currency.
- Implementing a system of penalties and rewards for traders and oracles who maintain or disrupt the peg to discourage manipulation.
- A dynamic adjustment mechanism, such as ad justing the interest rate or collateralization ratio, is used to maintain the peg in response to market conditions.
Implementing a system of penalties and rewards for traders and oracles can be a way to discourage manipulation in an ERM algorithm. The basic idea is to incentivize oracles and traders to maintain the peg by providing rewards for those who help to keep the USTC stable and imposing penalties on those who disrupt it.
There are several ways to implement such a system:
- Oracle rewards: Oracles can be rewarded for providing accurate exchange rate data that helps to maintain the peg. The rewards can be in tokens or other forms of compensation.
- Oracle penalties: Oracles can be penalized for providing inaccurate data that disrupts the peg. The penalties can be in the form of fines, suspension of oracle services, or other forms of punishment.
- Trader rewards: Traders can be rewarded for trading in a way that helps to maintain the peg. The rewards can be in tokens or other forms of compensation.
- Trader penalties: Traders can be penalized for trading in a way that disrupts the peg. The penalties can be in the form of fines, suspension of trading privileges, or other forms of punishment.
One example of a dynamic adjustment mechanism is adjusting the collateralization ratio. For example, suppose the value of the ERM token falls below the peg. In that case, the algorithm could automatically increase the collateralization ratio for borrowers, effectively making it more expensive for them to borrow and reducing the amount of USTC in circulation. This would help increase the USTC value and return it to the peg.
Another example is adjusting the interest rate for borrowing USTC. If the value of the USTC falls below the peg, the algorithm could increase the interest rate for borrowing USTC, making it less attractive for traders to borrow and sell USTC, which would help reduce the supply and increase the value of the USTC.
Additionally, the algorithm could include a system of penalties and rewards for traders and oracles who maintain or disrupt the peg. For example, traders who help to maintain the peg by providing liquidity could be rewarded with a portion of the transaction fees or a reduced borrowing rate. In contrast, traders who disrupt the peg by trying to manipulate the market could be penalized by reducing their borrowing limit or being banned from the platform.
the key to maintaining a stable peg is to have a dynamic adjustment mechanism that can respond quickly to market conditions and adjust as needed to maintain the peg.
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Just because Apollo 13 failed to make it to the moon doesnât mean we canât keep trying to go. We have to learn from our mistake so they donât happen again. But with our car analogy, what if the car is a rare classic 1967 Ford Shelby GT500. You canât just buy a new one at the dealership. if the car is worth fixing then fix it. you have to keep trying again. there are so many bright minds trying to figure this out. Even new cars can get to another accident, so does that mean you have to keep buying cars. sometimes itâs good to find ways to make sure accidents doesnât happen.
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If Apollo 13 had failed, the next model would have been improved and tried. What is the improvement in this proposal compared to the previous model?
It turns out that the car was wrecked and the reason for the accident was a fatal flaw in the operation of the mechanism. Then if youâre a normal person, you have to make up for that flaw. This proposal is now to recover defective products without any improvement. Of course, the attempt will not succeed, and Duncan will try moderately and make money from community pool grants and eventually give up on the grounds of technical problems. Make easy money.
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I havenât much technical knowledge . Can you please reply this proposal require lunc minting and fund required if required then how much ?
The car car was getting out of control due to a fault so it was parked for a while.
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Vote - Yes.
How much USTC we can burn with this?
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Just to add to your well articulated post:
We have various means of crypto manipulations: wash trading, spoofing, pumping and âdmpingâ, and insider trading. These actions can artificially inflate the price of a cryptocurrency, leading to a distorted market and potentially harm the investors.
Preventing cryptocurrency manipulation requires implementing strong regulations, market surveillance as you alluded to in your post.So too is educating investors on recognizing and avoiding manipulation.
If I may make your suggestions a little more clearer it means that it is important for exchanges and trading platforms to have robust measures in place to detect and prevent manipulative activities.
@wrapped_dday will the implementation require L1/L2 coding ? Have you gotten a feedback from @Zaradar ?
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It is a pity that the Code and the Network used by Binance for its Stablecoin BUSD is not its own but is made and managed and covered by the Pax Gold protocol.
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Greetings.
U know what people, we have to start do something about USTC, so i think this proposal look like this.
âCertainty Of Death? Small Chance Of Success? What Are We Waitinâ For?â
Bye.
Appreciate your effort to repeg USTC <> LUNC, USTC is what makes LUNC stands out from other chains afterall
But below are my concerns after reading the proposalâŚ
-
Where is the money ( Capital ) from to âholdâ the soft peg?
You cannot just define the price range without any executed trades to hold that at the exchange rate, creditability of the soft peg will be gone if the peg cannot maintain itself as the stated exchange rate, the soft peg will be non-existent.
Given things USTC have gone through, it is safe to say there could be a coordinate attack attempt to drain capital used to defend the soft peg if it was to be held.
Either way, exchange rate USTC <> LUNC is the equilibrium price of what buyer and seller agreed in a free market. How committed are we to defend the soft peg? And how? -
How to enforce exchanges to implement the same?
By the implement of on-chain tax, we showed that thereâs no way we can force CEX to do something they do not want to, off-chain policies are out of reach and you simply cannot enforce something you do not have control on.
How do you think you can persuade ALL CEX to run a validator node? Running a node is an extra expense for them. What is the incentives for them to run a node for this proposal?
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Everyone seems an very critical about USTC proposals so why not working together to help with USTC re peg proposal instead criticised 
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I havenât much technical knowledge . Can you please reply this proposal require lunc minting and fund required if required then how much ?
No new minting. Funding only if people require it. I will help code it for free (aka pay with my time) if community is in support. If not then Iâm outties.
Vote - Yes.
How much USTC we can burn with this?
Itâs not about burning, itâs about restoring value.
In startups, your âburn rateâ is how much money youâre blowing through until you become profitable. I donât think we should be encouraging making that number bigger since our profits are very, very negative.
@wrapped_dday will the implementation require L1/L2 coding ? Have you gotten a feedback from @Zaradar ?
Only from Ed. He said willing to test out on testnet or sidechain before going live, as I have mentioned was the plan throughout these discussions.
We have various means of crypto manipulations: wash trading, spoofing, pumping and âdmpingâ, and insider trading. These actions can artificially inflate the price of a cryptocurrency, leading to a distorted market and potentially harm the investors.
Preventing cryptocurrency manipulation requires implementing strong regulations, market surveillance as you alluded to in your post.So too is educating investors on recognizing and avoiding manipulation.
If I may make your suggestions a little more clearer it means that it is important for exchanges and trading platforms to have robust measures in place to detect and prevent manipulative activities.
To add onto this, the reason I added âget Cross-Market Consensus,â especially with CEXs, is that we need to ensure that they are not spoofing 1) the normal Oracle price and 2) the modified Oracle price aggregate rate. It is a very simple way for them to participate. In addition, they can be clustered under a quasi-subDAO which is part of what my research on the Titan project was anyways.
@grass_haha
But below are my concerns after reading the proposalâŚ
- Where is the money ( Capital ) from to âholdâ the soft peg?
The money comes from a few places: bids on-chain, bids off-chain, the oracle pool (taxed capitulation of May '22), the community pool (gas fees), implicit withholding taxes (volunteered burning), and regular carrying costs (people who are holding without staking).
The SoftPeg as outlined in the ERM is a temporary incentive code-piece with time expiry. The soft peg could be $0.020376 for a duration of 6 blocks (30 seconds) for what itâs worth. Itâs not necessarily $0.02, $0.03, etc. Floating rate.
You cannot just define the price range without any executed trades to hold that at the exchange rate, creditability of the soft peg will be gone if the peg cannot maintain itself as the stated exchange rate, the soft peg will be non-existent.
Yes, which is why we are addressing it. Ideally, we will collect data on this feature and allow machine-learning/AI arbitrage to hold the peg.
Given things USTC have gone through, it is safe to say there could be a coordinate attack attempt to drain capital used to defend the soft peg if it was to be held.
The ERM is designed to automatically shut off the incentive if it hits the boundaries. Outside of that, there is nothing stopping the price of USTC from absorbing large market sells except for holders/stakers and new bids, as we are seeing right now. An example of how we can protect this blowback from happening is to create dynamic Terra-Luna bonds at current valuations (ie when SDT is off-peg). That is separate from this proposal.
Either way, exchange rate USTC <> LUNC is the equilibrium price of what buyer and seller agreed in a free market. How committed are we to defend the soft peg? And how?
Algorithmically. The only commitment is to make the core algorithm (human incentives) more robust. We are seeing it happen in real time.
- How to enforce exchanges to implement the same?
They are requested to run a node under a subDAO cluster that can corroborate their exchange prices. If they do not, they are subject to laws that may govern them. IMO, working with honest exchanges is a better selling point than the possibility getting frontran by another.
By the implement of on-chain tax, we showed that thereâs no way we can force CEX to do something they do not want to, off-chain policies are out of reach and you simply cannot enforce something you do not have control on.
Agreed. I would like for at least one or two exchanges to participate in the node work. Otherwise I donât think this works â Ziggy or not. The question has always been there, and thereâs maybe 1 or 2 CEXs that still run those prices. If they stopped running their nodes (eg Coinbase, Kraken) then they are requested to re-run their nodes. I can speak with them, if necessary.
How do you think you can persuade ALL CEX to run a validator node? Running a node is an extra expense for them. What is the incentives for them to run a node for this proposal?
Commission to cover carrying costs; this also allows them to re-enable staking on their platform. Additionally, informing customers that their prices are accurately representative of whatâs occuring on-chain is more important. Would you use a CEX that does not run a node but sells you these assets? How do you know that large price swings are a result of illiquidity and not oracle manipulation?
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LUNC is better be stealth for some period. Itâs been a talk of the town way too recent. For the investment point of view, paradoxically, it needs volitatlity and uncertainty to exsist and slowly build up potentials. Such price-fixing updates, at this point of time, will increase accessibility to public, which I think itâs not the right time. maybe after some significant recovery in price and volume(naturally increased).
A chain deciding that it wants to apply a burn tax for a coin that it controls the supply of and asking the wider market to participate (and the wider market opting in or out accordingly) isnât price fixing, nor is it market manipulation since nothing artificial is stated about the price of the asset to the wider market.
A chain deciding that it wants to apply 5x gas fees via a community proposal that passed governance and is only applied on chain and has no ramifications to the wider market also isnât price fixing, nor is it market manipulation since again, nothing artificial is stated about the price of the asset to the wider market.
A chain deciding that it wants to disagree with the price that has been given to it via oracle feeds that take market data from other exchanges, and inject itâs own artificial market inefficiency after consensus has already been reached by the oracles to change the price of that asset and how itâs reported to the wider market in a manner that is not tied to any market forces like supply and demand, in an arbitrary and contextually based manner (be it algorithmically or manually), is price fixing and market manipulation.
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A chain deciding that it wants to disagree with the price that has been given to it via oracle feeds that take market data from other exchanges, and inject itâs own artificial market inefficiency after consensus has already been reached by the oracles to change the price of that asset and how itâs reported to the wider market in a manner that is not tied to any market forces like supply and demand, in an arbitrary and contextually based manner (be it algorithmically or manually), is price fixing and market manipulation.
Do you think there is a way to do this from another standpoint? Or only through a layer-2?