The Stability fund itself has proven to be a great success so far. So much so, that the IUSDC balance in the stability fund has hit its cap of ~2M tokens (stability fund is top holder cxa09…) USDS still is far from its cap, so anybody with an account on prime.stably.io could do the following arbitrage to keep the peg:
1.) USDS → bnUSD through stability fund (0.5% fee)
2.) bnUSD → ICX through Balanced DEX (1.3% fee)
3.) ICX → BTC on centralized exchange (~0.1% fee)
4.) Withdraw BTC to prime.stably.io (need KYCed account)
5.) BTC → USDS on prime.stably.io (not sure fees, but spread is probably at least 1%)
This full-circle arb costs ~3-4% and could take a decent amount of time, especially if starting with USD as cash. There’s also risk of holding the BTC, as Stably doesn’t immediately credit you. I looked into trading USDC on Stably and I saw a deposit option for Stellar-based USDC, not sure what exchanges support that though.
For next steps, I’d say the DAO has a few options worth considering:
1.) Raise the IUSDC cap
Pros
- More stability for bnUSD
Cons
- More risk associated with Orbit Bridge
- More risk associated with USDC as a stablecoin
2.) Do nothing, rely on USDS for now
Pros
- No added risk outside of what was already approved
Cons
- Need to rely more on USDS traders for bnUSD stability for the time being
3.) Add a new stablecoin when ICON Bridge launches (similar to option 2, still pretty much waiting for now)
Pros
- Adds more risk, but it’s diversified to a new stablecoin and/or new bridge
Cons
- Need to wait for ICON Bridge to launch and the Nexus/Balanced interface to support it, which is a bit of an unknown from Balanced’s perspective
Overall I’m open to suggestions on next steps and am curious what others have to say. I’d lean toward a vote to raise the cap to ~2.5M, then hopefully by the time that cap is hit we’ll be able to move forward with option 3.