Proposal to Launch ESD/USDC Market

Background

ESD is a novel Algorithmic stablecoin https://www.emptyset.finance/ that is an attempt at a fully decentralized stablecoin that is hyper scalable and pegged more tightly over time in theory.

There have been a number of expansion and contraction cycles to date and the long term viability remains unclear. That being said the nature of the system makes this a perfect 2 sided market. There are actually like a half dozen reasons some actor in the system would want to use a perp, here are some examples

  • Bonded ESD holder who is unlocking shorts to mitigate any losses during unbonding
  • Coupon holder longs when under peg to add buying pressure and make coupons more likely to redeem
  • LPer hedges out downside IL risk by shorting

Key Metrics

  • Uniswap ESD/USDC Liquidity $13m (was $140m when over peg)
  • Uniswap ESD/USDC 24hr Volume $6m
  • Very heavy DeFi native holder base
  • INCREDIBLY risk-on userbase who will use every piece of ESD risk exposure possible to play the game
1 Like

This is actually super interesting proposal. I don’t think it’s listed in many places so keen on thoughts of community

~1600 wallet addresses. Though the top holders seem to be a bit skewed. Or maybe the top one is the one releasing all the funds?

I’m not a huge fan of listing low liquidity, low distributed, low ranked and relatively unrecognized/unknown tokens on a DEFI platform that’s ironically itself in that category. Not because the token isn’t legitimate but because there are so many choices out there to pick from that has more name recognition. Image plays an important role to the reputation and growth of a platform so do we want outsiders to look at the exchange wondering why these tokens are being listed over others whether its out of being misinformation or just out of jealously their larger more well known coin isn’t listed?

That being said, this is one of those examples where I’d still be ok with listing it if those who are proposing its launch are willing to stake an isolated insurance fund for it themselves or gather enough people to do so. At least as far as optics, we could say the pair exists for this reason and anyone who opposes are free to make their own proposal and stake their own PERP to launch the pairs they want. This also protects PERP holders from getting too much risk/exposure to pairs that are too new to know enough about as I’m sure many of them hold PERP but don’t really pay much attention to governance.

This is a really interesting out of the box proposal. Great way to drive interest in Perpetual Protocol in an established community.

I really like ESD and hope the project succeeds. And that’s the main problem! If ESD succeeds as a stablecoin it will fail as a perpetual market. So, either ESD fails and it will not be good for PERP or it succeeds and it will not be good for PERP.

I think we should keep our eyes on ESD and if they succeed in making it stable, we will welcome the token as a collateral in PERP along with USDC. But not as an asset.

This is interesting. I’ve seen markets before for like DAI/USDC or USDT/USDC which we could theoretically do, but are you saying there isn’t enough volume here?

DAI/USDC trades between a very narrow price range, and if you want to make any profits you would have to use very high leverage. I just think these stablecoin to stablecoin trading pairs are a niche market, and that we should instead focus on listing more “normal” trading pairs in the beginning.

@tongnk I’m a big fan of your proposal to use a framework with objective metrics to evaluate new trading pairs. To me it looks like we need different/specific frameworks for different types of assets (governance-tokens, L1-tokens, stablecoins, stocks etc.).

I agree with various frameworks. I was thinking something similar to:

  • New tokens (less than say 1 month trading history?)
  • Non ERC20 tokens
  • Other ETH tokens

Though it’s a fair point if we use a different formula for vAMM - say stablecoins we should use something else instead of the regular x * y = k formula.

What do you think of the categories though? Would be good to start thinking of how we want to think of them