This was planned but the AUSD use hasn’t been enough so we paused adding collateral types.
I want to say that I think that anyone voting no on this is being shortsighted and basically harming themselves as ALPACA investors. This is a very important proposal to bring AUSD to life. Once AUSD gains utility and more circulating supply, other protocols will start using it and it can form a self-sustaining ecosystem similar to stablecoins like DAI and MIM. That means a lot of additional revenue for ALPACA holders.
AUSD can also allow us to unlock a lot more capital efficiency with Alpaca products. For example, we could add AV vault tokens as a collateral type for AV investors to also be able to mint AUSD, but that all requires AUSD to have utility to reach a larger circulating supply and stabilize the peg.
This proposal is a great way to initialize utility for AUSD and take a major step towards achieving these goals, so it’s simply shortsighted to vote no on this just because you want more short-term access to high leverage AV. If we can’t even push this vote through, we’re going to have a tough time ever being able to create utility for AUSD so by voting no–you’re effectively crippling AUSD, and eliminating many potential revenue streams for yourselves as ALPACA holders. So help yourself by voting yes.
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I would like to add that while Automated Vaults are a great product and can bring us several millions in TVL, building up AUSD is how we reach billions in TVL.
Collateralizing a position you do not want to sell is a huge value proposition. Adding incentives to buy and hold AUSD and therefore help uphold the peg is the key to attracting an order of magnitude more TVL. Let’s not forget that ibBTC, ibETH, ibALPACA and others can be added as AUSD collaterals.
To everyone that voted no on the proposal, I urge you to reconsider your position and to put long term protocol growth above short term gains.
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why should i rethink my decision, maybe if it was possible to mint AUSD for alpaca i would agree that it would be good for the token. then people could choose what is best for them, carry their alpacas to Governance Staking or to AUSD
You should rethink your decision for the following reasons:
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If this proposal passes, there will be an incentive to buy and hold AUSD therefore helping the peg.
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With AUSD at parity with the other stables (1$) we can attract more TVL from lenders seeking to monetize their assets (borrow against instead of selling, very tax efficient).
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This will help boost two revenue sources for the protocol which directly translates into a higher ALPACA price (all other things equal). Here are the two revenue sources:
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10% of 19% of the lending interest that lenders earn goes towards buybacks and burns of the ALPACA token.
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1% of 2% of Stability Fee charged on each AUSD debt position will be used for buyback & burn.
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AUSD has the potential to be big, maybe bigger than MakerDAO’s DAI (or at least as big). There is currently 4.5M AUSD in circulation, DAI circulating supply is almost 7B.
With the assumptions above being laid out, voting against this proposal is voting against increasing these two revenue sources by a factor of 1500.
Please, for the long term success of this protocol, think about it some more.
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The reason you can’t mint AUSD with ibALPACA at the moment is AUSD’s circulating supply is not enough. This causes the peg to be unstable due to a lack of buying demand and thus, we stopped adding assets like ibALPACA as potential collateral because we don’t expect much more AUSD to be minted. We need votes like this one to go through to build AUSD’s circulating supply so that you could mint AUSD with ibALPACA.
people who vote against, too, can be understood. alpaca has been falling for a long time, the main number of people who invested in xalpaca are at a big loss and believe that Automated Vaults x8 will contribute to the demand for xalpaca. this vote is counterweighted.
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The price of ALPACA has been falling for a long time because the tokenomics, at that time, were inflationary. They still are to a certain degree until March 2023.
Allowing AUSD-3EPS stakers to access high leverage vaults will not lower the demand for ALPACA. It proposes a different risk profile that will let more people participate in the protocol (stability seekers vs risk takers).
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I’ll add something else below for why we should create AUSD allocation for AV, or for why there should be gated allocation on high-leverage Automated Vaults in the first place.
Opening the AVs with private access first gives us much more flexibility later vs. opening high-leverage Automated Vaults without gated access.
It all comes down to AV demand. With limited access, if the high leverage AV vaults will be 100% full, it means we’re operating at max capacity and the ALPACA holders are taken care of more than random people. This is a good result, right?
If the AV vaults will not completely fill, we can easily loosen the conditions for allocation. For example, we can 2x or 5x the AV allocation for each 1 xALPACA or 1 AUSD held until the vaults are at full capacity, while still taking care of ALPACA holders.
In a case where that’s still not enough to fill the AVs, we can remove the access restrictions entirely. There is no reason for us to hesitate to remove the restrictions on AV access if there will be spare capacity that is not filled.
On the other hand, if we don’t have access for ALPACA or AUSD holders at the start, and all the vaults fill up with external investors, there will be nothing we can do at that point to limit access to benefit Alpaca investors because we can’t force existing investors to withdraw without creating huge resentment among those investors.
So by limiting access, we give ourselves the opportunity to not only fill up the high leverage AV, but we also:
(1) Increase the utilization of low-leverage AV(which non ALPACA/AUSD holders can still invest in)
(2) Give additional benefits to ALPACA/AUSD investors
(3) Create additional buying demand on ALPACA which increases the price
(4) Increase lockup of ALPACA in governance which decreases impulsive selling
(5) Fix peg for AUSD
(6) Increase demand and circulating supply of AUSD, which can lead to building an AUSD ecosystem, creating more revenues for ALPACA holders later
2 Likes
we need focus on alpaca price first.
alpaca price has been going down for a long while, and then we spend so much time on AUSD?
I understand that team does not care about alpaca price, team only talks about “fundamental/long tern trend/great project in years/ and etc”.
But we(investors/alpaca holders) do care short term alpaca price. team consider this vote from their own perspective, I do understand them. But people who vote NO should be understood as well.
please focus on alpaca , this is priority.
I have voted NO.
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By granting access to high-leveraged Automated Vaults to AUSD holders, we will increase its utility and demand for holding AUSD,
above is what I copied from proposal.
but I strongly doubt this opinion
if people hold AUSD only for “access to AV”, then this is NOT a real use case for AUSD.
what is real use case for AUSD? real use case(and real value) of AUSD is: people trust AUSD value, use AUSD to do transaction, stake it somewhere, and people accept AUSD just like AUSD is real USD, this is real use case.
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Alpaca Finance is not just one product. It is a suite of products, each with their own risk profiles, that aim to satisfy the needs of many different types of investors.
Automated Vaults are an outstanding product and the demand for them are very high. The protocol should use that to its advantage and use it to bootstrap other products that will help its growth.
One such product is AUSD. Creating ways to boost demand for AUSD, reach the peg and bootstrap a new stablecoin (this proposal) is focusing on ALPACA.
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so, holding AUSD for access to AV is a real use case of AUSD?
is this what team emphysized “value” of AUSD? is this a “boost demand”???
I am glad to know what is “value” and real case of AUSD.
give me a real use case of AUSD, instead of “blah-blah boost demand” this kind of bullshit
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I do not understand how AUSD will cause demand for the alpaca token, my opinion is that this vote will just affect the sale of xALPACA. why hold a losing token when you can invest a stablecoin and access AV vaults.
What needs to happen for ALPACA price to increase is to have healthy revenue channels providing buyback and burn and utilized products provide that, which is what we’re trying to make happen with AUSD. Someone already posted the mechanisms earlier.
This message sounds like you think we can magically pull up the price for you without building products like AUSD. Money isn’t created out of thin air unless it’s something like Terra.
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The original reason people hold stablecoins is to use them somewhere else, including at banks for redemptions.
Regarding what you said about people trusting AUSD value, use it for transactions, in order for that to happen, AUSD needs to reach scale and stabilize the peg. We need to build utility for AUSD by doing things like what’s proposed in AIP-8. Otherwise, it’s not like we can force people to use AUSD like a government with an army. If not for the method in this AIP, how else do you propose to get AUSD to that point you wrote?
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Do you know MakerDAO, Abracadabra? Issuing a stablecoin is the only way they make money.
Here are the revenue mechanisms for AUSD. The majority of AUSD revenue accrues to ALPACA holders:
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Well speak for yourself. I rather have Alpaca concentrate on building great products which bring natural revenue than do some quick pump schemes which wont help / work at all in the first place. Long term game has always been Alpaca’s focus, that’s why I am an investor and am bullish even if the price drops.
Also I have a profit from holding Alpaca (dollar wise) even at this price, just sayin’.
@Samsara gives a great point here that the parameters are not set in stone. We will be able to adjust them accordingly later on.
I think 3 to 1 ratio is minimum considering Alpaca is more volatile.
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no one is against new features, it’s just that in my opinion this vote immediately overlaps the previous vote where it was decided to give access to AV with high leverage only to xAlPACA holders. it is much easier for new people to enter the vault with a stablecoin than with an alpaca token. It makes no sense for people to invest in an alpaca token.
So if the concern is that incorporating AUSD as a collateral type for AV allocation would decrease the buying demand on ALPACA for AV allocation, the solution is to set a higher ratio for required locked AUSD to get $1 of AV allocation.
In this market, there will certainly be a lot of people unwilling to hold crypto assets like ALPACA but willing to hold a stablecoin like AUSD. This creates an onboarding route for them. At the same time, if they get 3x or more as much allocation from holding ALPACA, people who are open to holding ALPACA would hold it, because it also offers higher governance APY than holding AUSD does, and perhaps they want to speculate on ALPACA’s upside. There’s a balance that needs to be found regarding what that ratio is between ALPACA and AUSD for AV allocation, but this is the winning path to get the most users into the platform.
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