Proposal: Collateralizing VAI with $20 Million in Real World Assets with Credix Finance

Venus Governance Venus - Governance Discussions
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@August Please take your time

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Please see the disclaimers in the original proposal above which are also applicable to these comments.

Hi @Hiromatsu: Thank you for your review and questions. Iā€™m breaking up your key points below and providing feedback on each. Please let us know of further questions.

  1. At the current rate 20.000.000 VAI will swap for 19.400.000 USDC. If there will be a small wonder and you will receive close to 20.000.000 USDC: perfect!
  • To be clear:
    • We are not proposing Venus mint and/or exchange $20M at one time.
      • Attempting to do so could indeed be challenging and put downward pressure on VAI. That is not our approach.
    • We are proposing that this balance be minted and exchanged over time as demand organically grows.
  • There are multiple reasons why VAI demand may grow
    • VAI has the opportunity to become one of BNBā€™s most dynamic stablecoins. To my knowledge, no other similar assets on BNB are backed by Real World Assets today.
    • Venus would be generating a targeted 12.0% APY. This could be used to incentivize new VAI demand, perhaps through a specific pool or rate paid to VAI holders.
    • Venusā€™ multichain expansion may drive new demand.
  1. Lets say they stack it into the vault and earn 0,9 APY (should be the rate if you throw 20.000.000 VAI at the vault, perhaps its even less). Donā€™t you think this will create sell pressure again? Who wants 0,9 % APY when every other stable has more?
  • Weā€™re looking again at where VAI is today. How could that 0.9% APY be improved when VAI is generating a targeted 12.0% APY? That is a community decision, but the opportunity is significant for driving financial returns to VAI holders.
    • With the type of yield bearing collateral we propose, VAI could have an inherently above-market interest rate to incentivize demand.
    • New demand from this interest rate could then limit sell pressure.
    • With sell pressure limited and demand building, more VAI could be minted against more RWAs.
    • This could create an organic growth engine that helps VAI outpace other stablecoins.
  1. Another problem: Liquidity wise, there would be nothing gained, compared to todays situation. So a small sell (at the moment 50k VAI sold, would push send the price to 0,85 USD) would make the stability fee kick in and whoever minted those VAI would have to pay high stability fees.
  • From a liquidity standpoint, the main constraint appears to be demand for VAI. As outlined above, letā€™s assess how this partnership can increase that demand. Venus would be receiving a targeted 12.0% APY, which may be used to incentivize demand for VAI.
  • We plan to work closely with Steakhouse and the Venus teams to develop a plan with set parameters intended to limit downward pressure on VAI as the swaps take place.
  • For full clarity, we do not recommend executing the full exchange at one time. It would be best as a deliberate, metered approach guided by the available liquidity and market tolerance. We are not proposing to mint all $20M at once.
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All: Iā€™m highlighting an edit we just made to the proposal for full visibility. The ā€œDisbursement Scheduleā€ under section 5 was updated as noted below:

Old:

  • Disbursement Schedule: $5 million per month beginning at contract implementation.

New:

  • Disbursement Schedule: Beginning at contract implementation; Targeted $5 million per month subject to VAI liquidity and market dynamics. Final Disbursement Schedule will be established working with Venus and Venus advisors following a successful initial vote.

Thank you all for your continued interest and engagement. Please let us know of additional questions or comments.

August

cc @Hiromatsu (as this relates to your question)

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TLDR: Snapshot to start the risk assessment and implementation of Credix proposal

Part of our RWA initiative proposal to the Venus community is to perform up to 4 assessments on RWA.

According to our current RWA strategy, onboarding Credix would be in the third prong. As noted by some Venus participants, the protocol is not ready yet to allocate 20M of capital to a RWA. Yet, doing the risk assessment and implementation package will take some time and we expect months of work from the Credix and Steakhouse team. By delaying this part of the work, you might end up not being able to invest in RWA when the protocol will have the funds to be invested.

We have met with Credix team many times and consider their proposal interesting. Credix team feels strong and the asset class is interesting. To be clear we donā€™t have an opinion yet on the proposal, that would be the result of the assessment. But we are interested to do an assessment on the Credix proposal and report to the Venus community.

Should the community approve, we will work with Credix to perform the assessment and solve any RWA-issue along the way. The goal is to provide Venus community with an assessment and an implementation plan. Then, the Venus community will have the opportunity to vote on execution or not.

PS: For the sake of efficiency, @steakhouse will ask to be added on the whitelist to post snapshot votes in order to maintain transparency and community engagement along the process.

PPS: Snapshot is live, please feel free to vote

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