I would like to resurface this discussion as I think the increased scrutiny from regulators looking to include stablecoins as securities can be extremely risky to Olympus.
Why?
Since Olympus' mission is to become "The Decentralized Reserve Currency", I'm going to reiterate on a couple of points that must've been mentioned previously.
- While arguably at least partially decentralized, DAI and FRAX are basically >50% USDC. Which is a centralized stablecoin regulated by US regulators. If they choose to blacklist the MakerDAO or FRAX vault, the Olympus treasury is basically f-ed.
Pros for DAI/FRAX
- Stable 1:1 peg
Cons
- Systemic exposure to USDC (FRAX - 82.5%, DAI - ~53%), wouldn't be stable without this
Pros for offering UST bonds
- truly decentralized with a non-USDC/USDT collateral (overcollateralized by LUNA) with custodial risk
- No hard peg, uses game theory to maintain peg.
- Have maintained +/- 2% peg for 99% of its existence
- LUNA-tics are fanatical just like Ohmies, bonding UST would garner a lot of support and acquire more users for OlympusDAO
Cons for offering UST bonds
- exposed to reflexivity, when LUNA dumps hard ala May 2021, UST lost peg for approximately 3 days for fear of bank run.
- All is well after due to significant overcollateralization by LUNA
Summary
For OHM to truly become the decentralized reserve currency, it needs to be backed by a truly decentralized treasury. Unless something changes, DAI and FRAX just don't cut it to achieve Olympus' mission. The stablecoins that fit the bill here (without a shadow of doubt) is UST (and possibly RAI).
Hope this can re-spark the discussion as I'm a big fan of Olympus (and also Terra).