It’s nice to see the conversation started over here! I’ll add some considerations that are important from my perspective. Let’s keep it simple & use the big players. Even since the initial discussions, there have been serious developments with several of the largest stablecoin farm protocols.
DeFi is such a dynamic space which presents the enormous challenge of having awareness of best options which change by the minute. It’s also full of risk, so we’re determined to use trusted protocols to earn more modest yield (as compared with chasing extra yield points in untested BSC protocols and so forth).
A word on fiduciary responsibility and mechanics of XUSD collateral withdrawal… One benefit of operating as a cross-chain clearing house for stablecoins (as compared with volatile cryptocurrencies), is that we can reasonably assume we’ll be able to provide liquidation of XUSD (burned upon conversion back to stablecoin) in any stablecoin desired… but that introduces a greater degree of potential for stablecoin arbitrage traders to use the protocol in a way that’s not intended (although we could find ways to provide stablecoin arbitrage within our suite of services??? that would be so epic!).
Basically, every additional ounce of complexity multiplies challenges, so ease of communication & implementation are fairly significant priorities for me… especially in this early phase. We need to consider the fiduciary responsibility and clarity of communication with regard to the value proposition. Users need to understand the scope of our collateral management practices… ideally, as a DAO, our community should be making these decisions as they come to fully formed BIPS.
Let’s stick with the top 5 protocols by AUM for 90% of the collateral farming? Perhaps we could propose to allocate 10% towards less battle-tested options, but which provide unique yield opportunity for lower market cap stablecoins on smaller chains. Some of the collateral we’re holding can’t be farmed anywhere that I’m aware of. Is there a farm for DOC? In those smaller use-cases, we may discuss whether we’d like to dabble in taking a more active approach in managing our collateral basket. It certainly introduces a lot of entropy and challenges with record keeping and accountability. Simplicity to start. Complexity over time.
We’re holding a mountain of USDT at the moment, which makes me uneasy. I’d like to see us diversify the collateral, but I’m not comfortable with us doing that without a very well-written BIP. Nonetheless, dependent upon how actively we intend to manage our collateral basket, we may find that the protocols we use will be somewhat defined by the collateral we receive.
Let’s shop around for top USDT farm yields on Ethereum network, but let’s also discuss converting some of this USDT in order to diversify our basket. That seems imperative at this point. Alternatively, we could temporarily pause receiving USDT deposits and/or initiate FISH rewards for deposit of currencies we need for dynamic rebalancing, and pay 0 FISH rewards for USDT deposits, while incentivizing deposit of preferred stablecoins with FISH rewards.