Thank you very much for your insights and clearification.
The present Reserve Ratio of 2,67 seems somewhat reassuring.
- How far is the automated reserve liquidation mechanism?
- When bying BTC, ETH when prices are high and selling when they are very low, who pays for the loss? I guess the BTC and ETH have been payed for with CELO originally? But it does not seem like a good Idea from a business point of view to buy high and sell low.
To me this mechanism of selling Crypto-assets when there is a Crypto-crash to back cStables has diffenten disadvantages.
- It can influence other systems like DAI. If different projects use stables like DAI for reserves it could influence the stability of DAI system when reserves are liquidated.
- When selling BTC and ETH in a crash situation it will burden the anyway strained market even more and pull BTC and ETH even lower, with all the cascading effects on the other crypto coins / projects.
Why not back cStables with a mixture of:
- Crypto
- DAI
- physical Gold
- non US-Dollar Fiat
That would give much more stability in a variety of market conditions.
To limit reserve to just crypto is vulnerable in a crypto-crash situation, especially if the automated reserve liquidation mechanism sold all assets, then cStables would depeg and the same fate like UST could follow. I think there is a variety of possiblities that could crash crypto-market even more than seen now (due to attacks, due to technical failure, due to coordinated attack on electrical grids ect. pp).
What do you think about my concerns?
What was the reason for the 0,9666 value decline of cUSD last night?
Greetings
Bab