Emergency Stable Coin Proposal

Emergency Stable Coin Proposal

Given the recent event of UST losing its peg to USD, we have brought forward a proposal asking the community whether they would like to consider changing our community wallet stable coin to an alternative to Tether, given that Tether also recently depegged from USD in the past few days. Albeit only briefly, this was the first time this has happened in two years.

Although only speculation, there is suspicion that more than one stable coin could be being targeted at this time as they have been disrupting the traditional financial systems. On 05/07/2022-05/08/2022 UST also depegged to a smaller amount than the recent Tether depeg temporarily before its collapse a week later. This was a suspected vulnerability probe before the execution of the downfall of LUNA and UST. Although we believe Tether is unlikely to collapse in the same manner, we’d like to propose the options to consider changing our stable coin and become more risk averse given the recent Tether depeg, in case the recent depeg was also a vulnerability probe.

We have the option to simply keep our community wallet stable coin as Tether, switch to another stable coin if we feel more confident elsewhere, or to diversify into a number of stable coins. Bare in mind any stable coin exchange will see fees. The proposed stable coins are as follows:

Tether - USDT

Tether (USDT) is a cryptocurrency stablecoin pegged to the U.S. dollar and backed "100% by Tether's reserves," according its website.1 Tether is owned by iFinex, the Hong Kong-registered company that also owns the crypto exchange BitFinex. It is the largest stable coin by market cap.

More information: https://www.investopedia.com/terms/t/tether-usdt.asp#:~:text=Tether%20(USDT)%20is%20a%20stablecoin,value%20within%20the%20crypto%20market.

USD Coin - USDC

USD Coin (USDC) is a digital currency that is fully backed by U.S. dollar assets. USDC is a tokenized U.S. dollar, with the value of one USDC coin pegged 1:1 to the value of one U.S. dollar. The value of USDC is designed to remain stable, making USDC a stablecoin. USD Coin is an open-source project, meaning that anyone can view and contribute to the project's code.

More information: https://www.investopedia.com/usd-coin-5210435

Binance USD - BUSD

BUSD is a 1:1 USD-backed stablecoin approved by the New York State Department of Financial Services (NYDFS). It is issued by Paxos in partnership with Binance. More information: https://research.binance.com/en/projects/binance-usd

Founders Opinion:

Whilst we think the risk of a complete Tether collapse in UST form is very unlikely, it’s not an impossible situation. We feel it would be best to diversify our stable coin holdings 50% to USDC and 50% to BUSD as a precautionary measure against any potential collapse / depeg of USDT.