Adding CHF and schedule for other cStables

[Pinotio.com]

Hi folks,

Learnings from cREAL
Specific remarks are perhaps best placed in the [cREAL forum discussion (cREAL Stable Asset (formerly cBRL)).

It’s early still, but the outstanding amount of cREAL is tiny (~$100 worth) compared to cUSD ($100M) and cEUR ($50M). I find that surprising and worth questioning:

• Is it that we just don’t have many Brazilian community members? (there were a few active in the forum)
• Is it a lack of a cEUR <> EUR ramp? (I would think not because I’m guessing cEUR had this issue too at the start)
• Is it the lack of integrations within Dapps? If so, why weren’t Dapps ready or don’t they see a need to prioritise cREAL? (This is not a criticism of Dapps on Celo - my guess is either they legitimately don’t see this as a priority OR were unaware of launch).
• Is it the lack of a pre-mint? I believe there was a pre-mint for cEUR, but the outstanding cEUR is quite a bit larger than the pre-mint. [To be clear, I’m not a fan of a pre-mint unless there is a strong reason to believe it has a non-linear positive kick-start effect on circulation/demand.]
• Is it that cREAL (and BRL in general) is a bad currency to hold because it’s not as stable as USD or EUR. Maybe people in Brazil would prefer to hold cEUR/cUSD than cREAL? [This might be totally wrong, but worth asking].
• Is it the lack of liquidity incentives? (btw, do any DeFi4All funds go to cBRL?)
• I’m still a bit puzzled why it is called cREAL and not cBRL when the forum seemed at best split, if not favouring cBRL. Maybe this is water under the bridge, but it would be good, for future cStables, to try and reach rough consensus on the forum.
• How do we measure the success of a cStable launch? Can we start to track metrics like velocity as well as just outstanding amount (I think we care about both)?

Financial inclusion lens for cStables
We’re trying to get financial inclusion here so one lens for choosing cStables is to do what’s best for inclusion. What is better for those with bad financial access? Is it giving access to digital versions of volatile local currencies OR is it giving access to digital versions of more stable currencies that countries with higher financial inclusion have (e.g. cUSD, cEUR)? It sounds a bit imperialist, but I think is a question worth asking.

Competitive advantage lens for cStables
Inflation is top of mind right now in global media, and there are few easy inflation hedges. One potential hedge - that is not easy to implement in practise - is to buy Swiss Francs (or perhaps, to a lesser degree, British pounds).

So, I’m wondering if there might be a strong demand for cCHF (a bit clunky), the Swiss Franc OR perhaps cGBP.

On a related note, in the medium term, I think we will want to have some kind of a cStable that is not a pure fiat. Perhaps it will be a CPI indexed stable, or perhaps something else. This would be a way to get away from issues of centralisation but a first step seems to get cStables on-boarded that have governments that tend to act independently (and generally conservatively with respect to inflation, i.e. Switzerland - although CHF of course has had some issues, such as rapid price de-pegging some years ago).

cStable Roadmap
Is there a rough roadmap or at least order of priority that we are coordinating on for cStables in 2021? I think it would be good to get input on the forum and try to align on a coordinated roadmap.

[Patrick]

Thanks for brining this up because I think you are asking the right questions.

Is it that we just don’t have many Brazilian community members? (there were a few active in the forum)

We’ve seen more attestation requests from Brazil than almost any other country
(https://metabase.celo-networks-dev.org/public/dashboard/b0a27650-1d62-4645-81d7-26ff7546ff0d?date_filter=past2years~). So the data would suggest that we have an untapped market of potential users.

Is it a lack of a cEUR <> EUR ramp? (I would think not because I’m guessing cEUR had this issue too at the start)

I assume you meant cREAL<>BRL ramp here, and this may be a contributing factor. I’m aware of a couple of projects to make on/off ramping easier but this is an area that needs additional support.

Is it the lack of integrations within Dapps? If so, why weren’t Dapps ready or don’t they see a need to prioritise cREAL?

The launch of cREAL was not as well coordinated as the launch of cEUR. For cEUR, Moola and Ubeswap were consulted to make sure we would be ready to add support including liquidity mining incentives the day of launch. That didn’t happen this time and so I was not aware when cREAL would launch, until the day the proposal was submitted the second time.

We’ve added cREAL to our roadmap and anticipate going live with a cREAL market before the end of January. It’s not too late to do a ‘cREAL #D4TP’ launch that pays extra cREAL incentives for things like saving via Moola/GoodGhosting/PoolTogether/Valora, providing liquidity via Ubeswap/Sushi/Symmetric/Mobius, and donating cREAL via ImpactMarket.

I’m still a bit puzzled why it is called cREAL and not cBRL when the forum seemed at best split, if not favouring cBRL.

Agreed.

How do we measure the success of a cStable launch?

Primary metric to measure success that I’d use is circulating supply.

[Patrick]

cc: @Polo @renankruger @edlovecrypto

[Polo]

Hi @Pinotio.com, it is good to have your questions… I’m still digesting your Celo Reserve Liquidation Mechanism. Thank you for the intellectual generosity - lot’s to learn!

• We definitely missed an open Voting Pool to have a more clear consensus on the cBRL vs cREAL name.

• In the moment of this writing, cREAL has just 20 days and 61 wallets. Since your post 20h ago the reserve increased from ~$100 to ~$1900. Slowly growing… in the end of this writing, it doubled to ~$3853 and ~$15k an hour later…

• Personally, I prefer to hold stabler currencies; R$ BRL devaluated 10% last 6 months, and more than 150% since 2013 (lot’s of geopolitics that doesn’t fit in this post). The elites who moved R$1.5M into dollar offshores (like our Minister of Economy) profited more than a minimum wage per day so far. Many gov folks are profiting “going short” on the country. But, clearly: most of people are not aware of it at all. We have elections in October and I can just imagine more economical instability in the next 24 months; IMHO.

• Our minimum wage is now ~$210/month. A MacBook Air costs 1-year work, if you don’t eat or pay rent. It gives an idea on why so many young people started to speculate with cryptos, dreaming about other incomes to reach their more-incited-than-ever desires. Saving accounts in Tradition Banks can give up to 6%/year today - but it is related to an always-changing inflation metrics. I do believe when people start to realize the possibility of more than 10%/year on DeFi savings with Moola/Valora-like apps, it can grow exponentially. But, in general, it is hard to follow how money can loose power or be eaten by inflation until the price of food doubles.

• It seems we are few brazilians here; at least the English-speakers I see active on Discord and on this Forum. I have just chatted with @edlovecrypto and @MilaRioja so far. But the possible beneficiaries thought impactMarket in the country are massive, for example. Today I had a chat with Jessica, who mentioned that more than 10 thousand people are getting cUSD in Brazil, full communities soon receiving cREAL. Financial inclusion with a cStable different than dollar is just starting. However some Merchants in some communities can ask 50% fees for trading it into FIAT.

• I’ve been working on a BRL<->Crypto bridge, and had been granted last month by CCF to keep this R&D with cStables. Thank you for coordinating it @Patrick! We do have a system that beautifully automatizes a BRL<->cBRL (opz, cREAL!) using a digital brazilian bank account in the backend. The problem is to make it all legal. Bureaucracy is a big reason for lack of financial inclusion, restricting companies formation, preserving monopolies and so on. Our platform works fine as a small scale P2P solution with known people. We are struggling to find a legal structure to - hopefully - fit it as a payment gateway provider, rather than an exchange, allowing it to scale. Proper KYC really sucks, asking many docs and proof of residency - which is far from the reality of most of the people in the communities we would be interested in providing a 1:1 on/off ramp.

About the “imperialist” concern, check the Europen Central Bank statement,

“The availability of a CBDC could facilitate currency substitution in third countries with instable currencies and weak fundamentals. It might facilitate digital “dollarisation” in such countries, leading to the full or partial replacement of their currencies with the CBDC for local payments, as a savings vehicle and, ultimately, as the unit of account. This would strengthen the global status of the currency in which the CBDC is denominated but would also reduce monetary policy autonomy in the economies concerned.”

A prosperous 2022 for y’all!

[papa_raw]

@Pinotio.com

• How do we measure the success of a cStable launch? Can we start to track metrics like velocity as well as just outstanding amount (I think we care about both)?

Slightly off-topic, but…

I would like to see more ESG-focused metrics included in success definitions for launches. I was speaking to a key individual for one of Celo’s biggest wallet products and learned that their main KPIs are users and volume. I asked about the quality of users — were they local shopkeepers, for instance, or key local commerce nodes within their communities? These types of qualitative measures were unfortunately neither measured nor considered.

For me, a successful stable launch means…

• Local/digital shopkeepers and commerce adopting the cStable currency without the intent to trade out to fiat or another stable
• The augmentation of K-cycle centrality and other cyclical community-money health indicators
• The usage of cStables in investment and capital formation, e.g. used in IDOs to finance environmental conservation or DAO-formation efforts
• An increase in money velocity and access in underserved areas

Having strong liquidity and mining incentives is absolutely a requirement for a successful launch – without liquidity no cryptoasset can thrive. But I believe the intent of Celo’s ecosystem should go beyond these minimum requirements to access and solve real-world problems – with the numbers to back it up. When an entire community adopts a cStable, it becomes sticky to that community. We should have a sticky rollout strategy accordingly.

[martinvol]

Hey there!

Thanks for starting the conversation Pinotio! I wanted to provide my thoughts.

Regarding cREAL slow start: I think the timing wasn’t great. It is the end of the year on most of the world with lots of people taking time off and many teams hesitant to push new code. In South America it’s summer, so people tend to add the last week of the year with long holidays, so these months tend to be quite slow there.

I was the submitter of the proposal and decided to go ahead with the initiative regardless, so that when everyone is back this year they are ready to go. You can think this as a “soft launch”, and the big splash doesn’t necessarily have to happen right after the thing is activated on-chain.

The way Mento works, liquidity is build up slowly, as there is a cap on how much you can mint without paying excessive slippage, so liquidity will take a couple of weeks to build up. Keep in mind that cREAL has the smallest Mento buckets, given that REAL is the most volatile of the fiat currencies we currently support (and will get increased as we gain confidence, like it happened with cUSD and cEUR).

In my perspective didn’t make sense to rush big liquidity minings at launch, as outsized incentives could have easily lead to a depeg. Also, many partners on the ground were still integrating with Celo, so I think I’d have been odd to make a big splash about cREAL and having everyone in Brazil actually not able to participate. The situation has changed recently with Novadax and BitcoinTrade listing CELO.

Regarding cREAL as an asset: Even in places where inflation is very high, people use local currency as a currency of accounting, because their salaries and fixed expenses are denominated in that. I am Argentine and I know that rent, groceries and salaries are in ARS for most people. That means that if you try to mix EUR and USD in the middle, you created a lot of friction, because every negotiation about the price of a good also becomes the negotiation about how much the EUR or USD should be worth in that particular case. Also, FX is regulated, so it’s not trivial to answer the question of how much should a USD be even worth. Being able to transact in you local currency is a benefit in most practical cases. And if you worry about savings in the long run, you could exchange instantly to cUSD/cEUR or CELO on-chain without intermediaries!

Related cCHF as inflation hedge: it is actually a good idea, I haven’t thought about. It’d be worth researching if CHF has a good liquidity with other cryptos so we can spin up oracles easily. I can’t think of a good way of getting CHF myself if I wanted to, so the idea could be quite interesting.

Also worth checking that “CHF as inflation hedge” could be a real value proposition and not just a narrative, as it hasn’t really outperformed the dollar in the last five years much. Does anyone have information about the target printing the Swiss government plans for the next couple of years?

USD/CHF chart:

[Pinotio.com]

Thanks @martinvol for those interesting insights. It would be interesting to chat more some time to get more of your Argentine perspective. Much appreciated.

On inflation, I’m thinking about combatting the risk of severe inflation over long (multi-decade) time periods. So, I’m less looking at short-term charts and more looking at the degree of independence of thinking between, say, the US Federal Reserve and the Swiss Central Bank. My sense is that there is reasonable correlation, but I think CHF gives some diversification based on the fact that it has long traded at negative interest rates (before the EURO did), indicating strong demand (presumable as a hedge because why else?).

You raise a good point on crypto liquidity . I suspect CHF<>crypto liquidity is poor relative to USD<>crypto. However, I’m not sure that matters too much. Most people wanting the hedge would probably get in via dollars and they could get out via dollars as they need to spend. They probably wouldn’t be spending in fiat-CHF. Celo would be offering them a synthetic peg.

[martinvol]

The point about liquidity is not to tackle the problem of how would people onboard into crypto from there, but rather if it can be trusted as a source for the oracles.

We’d need to report on-chain the price of the CELO/CHF, so there’s has to be a relatively liquid market CELO/CHF or at least a liquid BTC/CHF, USDT/CHF. The reason for that is that the crypto opens 24/7 and is the market traders can potentially use to market make.

[Pinotio.com]

Yeah, good point Martin, thanks.

[djlera]

hi! quick comment that cBRL was/is a legal problem with a company claiming trademark rights to it (https://cryptobrl.com). it’s not clear you can trademark a ticker (check out Cracker Barrel).

also I understand people in Brasil don’t refer to their money as “BRL”, that’s more an banker/forex thing. does that sound right @Polo ?

I think to the retrospective, how do these types of insights get into a Voting Pool? Thanks for kicking this off @Pinotio.com !

[Polo]

Right, Real is how we call it since '94. I did a small analyses of “their” cBRL here, it was being used in between some crypto exchanges in Brazil, then - while we were discussing it - they were bought by a Swiss company who launched BRZ.

The CBRL currency will be out of circulation on 12/31/2021 . It’s important that you exchange CBRL for reais or BRZ before this deadline!

Nothing really trademarked; nor even listed on coingecko, for example. I am happy moving on with cREAL! But @Pinotio.com questions are good for future cStables enhanced collective decisions.

[aaronmgdr]

Not sure how IP law in brasil works but there was already a cUSD when we launched too. just be cause a ticker is used by a token doesnt automatically mean we cant use it.

I doubt there are really any places where people refer to their currency colloquially by the international short code. Going forward I hope we stick to the short codes and launch for instance cGBP not cQUID

[MilaRioja]

Hi All,

Catching up now. I have a lot to share in this context. Some thoughts that could use your appreciation:

1. cReal is the first stable launched in a country where Celo had virtually no awareness, no positioning, very strong and better positioned solutions and a market that arguably is more welcoming to crypto then US/Europe itself.

2. Brazilians speak Portuguese, and as you can attest Celo has virtually no tech documents in such language.

3. No Celo ecosystem partners were providing Celo Real liquidity at the launch. Even so, Brazil was the first country able to achieve:

a) possibly the highest number of CICO partnerships at launch;
b) First commit of Celo stables debit card;
c) only country where you can use Celo to pay in more than 1,6 million POS, among many other accomplishments.

The amount of partnerships at launch with real world use cases is a first in the history of Celo and probably Web3.

What I think should be taken into consideration is:

1. Brazil is an institutional market. B2B partnerships and integrations are the key to unlock volume/liquidity.

2. Launch plan was detailed, purposeful and needed dedicated personal to implement. W/o this and dedicated resources (specially for PO/PM/Marketing) we are certainly underperforming while with the “upper hand” on the partnerships side.

3. To your points:
   a) Brazil has a wide community, and maybe whats lacking is a commit from Celo to have Portuguese dedicated resources to address the community
   b) Brazil had the highest number of CICO options at launch. Whats is lacking is technical/PM/PO support to implement
   c) Same.
   d) Yes. Agree the pre-mint should be at least 1/10 of the expected market share. The lack of liquidity severely impacts the growth of the market and region.
   e) Nowadays is better to hold Reais then USD, as the latter inflation is worse. The point that is being missed here is that cReal has real world use cases (you can buy coffee and a car w/ it), and there is no support to enhance this use case.
   f) Liquidity incentives are interesting as long as does not allow for a hit and run strategy. I think we should be more creative towards what do we need to enhance DEFI adoption.
   g) cBRL is a name for gringos, not for locals. The average Brazilian Joe does not know what BRL is.
   h) Before measuring success I think we should be discussing what is the minimal infrastructure and commit needed for a launch. If you talk success w/o understanding bottlenecks its just an observer intellectual exercise w/o any possibility of generating concrete impact on the actual case.