Re-posting the idea from the second half of this post a few months ago https://firefly.social/post/x/2022669570788487542: (This is very relevant to the options ideas from yesterday) Question: if we're making a synthetic stable, what should it really be stable WITH RESPECT TO? USD is actually far from the best choice. --- What do people who want stablecoins ultimately want? They want price stability. They have some future expenses in mind, and they want a guarantee that will be able to pay those expenses. But if crypto grows on top of USD-backed stablecoins, crypto is ultimately not truly decentralized. Furthermore, different people have different types of expenses. There has been lots of thinking about making an "ideal stablecoin" that is based on some decentralized global price index, but what if the real solution is to go a step further, and get rid of the concept of currency altogether? Here's the idea. You have price indices on all major categories of goods and services that people buy (treating physical goods/services in different regions as different categories), and prediction markets on each category. Each user (individual or business) has a local LLM that understands that user's expenses, and offers the user a personalized basket of prediction market shares, representing "N days of that user's expected future expenses". Now, we do not need fiat currency at all! People can hold stocks, ETH, or whatever else to grow wealth, and personalized prediction market shares when they want stability.
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Building index-tracking assets on top of options instead of debt https://ethresear.ch/t/building-index-tracking-assets-on-top-of-options-instead-of-debt/25036 What if the use options as the base of defi, instead of CDPs and liquidations? So instead of extreme price movements creating a sharp and global "you get liquidated" effect, instead your exposure to the index diverges quadratically from your preferred exposure in a smoother way? A key benefit is getting rid of the need for instant oracles, and instead making everything work on top of "slow oracles" (ie. the type that prediction markets use) This design has a significant downside - the need to do regular rebalancing - and an open question of whether and how this rebalancing can be made slippage-resistant enough. But it's worth considering and trying IMO. I would feel much safer holding algostables inside something like this, than in something that depends on an oracle that has to give real-time answers (and therefore could be tricked into giving wrong real-time answers with no time for human recourse).
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In an ideal world all software and hardware would have "nutrition labels" that provide a full list of trust dependencies - what math and which actors' honest behavior (and on what time scale) the system is relying on to provide its core functionality and implied guarantees. https://x.com/Fricoben/status/2059567691103371382
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