NDOL stable pool

[0xKoda]

Discussions in the discord show some interest for a stables pool on a curve like protocol (Rose), creating a pool with NDOL + UST + USDC, thus facilitating capital efficiency in rebalancing the pools and providing arbitrage opportunities for market participants. Curve has done this with curve factories, which allowed MIM to create a stable asset that was balanced in a tri-asset pool. Let's discuss the implications of this, the affect it would have on NDOL and the underlying assets used to mint it.

[leaf22]

While I do think having a stablecoin pool which includes NDOL is a fantastic idea, it is not the way to go about bringing us back to peg as it does not solve the underlying undercollateralization issue.

We should be clear that NDOL trading below $1 is not an arbitrage opportunity nor a market inefficiency. That is simply what it is currently worth. Incentivizing a sufficiently large pool doesn't change that. The inefficiency would be NDOL trading far above redemption value.

[0xKoda]

Yes this is a very valid point, thank you for bringing it to light, what are your thoughts on below?

[jommi9]

We need to def decide if we want nDOL to be a weighted index of treasury, or a stablecoin.

The only way we can attempt to bridge these is go the MKR / QI route of not allowing 1:1 mint of nDOL, but rather a reduced ratio.

The basic idea here is akin to:
ETH price = 1000
Max Mint Ratio = 70%
Liq Treshhold = +10%

Deposit 1 ETH, mint 700 nDOL.
If ETH price drops to 800, user gets liquidated.

[0xKoda]

I like this approach, perhaps steering away from the US dollar would do us good. Money used to facilitate a users claim to a vault of gold assets, aka the gold standard. The gold standard was done away with decades ago in favour of credit lines, resulting in inflation and money printing debt that ultimately ruined societies claim to the "underlying" of the US dollar. We could give this narrative new light, there has certainly been calls for returning to a similar metric of "gold standard", see:

"The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort of another. On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past." from Brief History of the Gold Standard in the United States