oneSUSHI Proposal: A Stablecoin Governed by Sushipowah

Summary

There is $193M of DAI, USDT, USDC, and sUSD deposited to Sushiswap and not a single one of these coins was minted with Sushi. But there is more to this one-sided deal:

  • SUSHI rewards drive the usage of these stablecoins, but these stablecoin’s websites don’t even mention Sushiswap.
  • There is downward pressure on the price of SUSHI every time SUSHI is swapped for one of these stablecoins.
  • 64% of these stablecoins are created in collaboration with centralized competitors to Sushiswap.

The creators of these stablecoins earn on the basis of this locked value. This locked value doesn’t include SUSHI and none of these earnings are shared with SUSHI holders. In contrast, Sushiswap is a community driven project with community values.

Abstract

We will solve these issues by creating oneSUSHI. oneSUSHI will be…

  • ICHI’s 4th stablecoin in the last month
  • Minted with SUSHI + an ever-diminishing amount of USDC
  • Just as stable as USDC and USDT
  • Initially traded on Sushiswap
  • 100% on-chain and transparent
  • Governed by Sushipowah

You need to purchase SUSHI to mint oneSUSHI. This purchase pressure partially offsets any swaps of SUSHI for oneSUSHI. There is nothing to offset the selling pressure when SUSHI is swapped for USDC/DAI/USDT/sUSD/etc.

Motivation

ICHI was inspired by Sushiswap in many ways: there was a 100% fair launch, no pre-sale, no initial dev fund, and is 100% community driven. The ICHI community has dropped their plans for their own exchange and is in the process of migrating their liquidity to Sushiswap to participate in Sushiswap’s Onsen program. It would be an honor to also create oneSUSHI for the Sushiswap community.

Specification

oneSUSHI, like the other ichi.farm stablecoins, is more decentralized than any other stablecoin while also being just as stable as centralized stablecoins. It accomplishes the former through creating a community governed treasury of a specific cryptocurrency. This cryptocurrency is SUSHI in the case of oneSUSHI. It accomplishes the latter by also holding a large reserve of existing stablecoins (ie, USDC) to guarantee that you can redeem a oneSUSHI for $1 of value. Over time, the minting ratio (the percentage of collateral represented by USDC) will decline as oneSUSHI becomes over-collateralized by SUSHI.

Who are we?
ICHI is a community and protocol focused on enabling each member cryptocurrency community to mint and govern a fully-autonomous stablecoin designed to help them accomplish their goals. Since its launch a few weeks ago, ICHI has attracted almost $20m in funds for stablecoins designed for Bitcoin and Ethereum.

Proposal

We will deliver oneSUSHI within 2 weeks after a positive vote by BOTH the ICHI and Sushiswap communities. We propose the following equal exchange of value between the two communities:

  • 25k SUSHI to the ICHI deployer address upon the launch of oneSUSHI: 0x11111D16485aa71D2f2BfFBD294DCACbaE79c1d4
  • 50k ICHI to SUSHI-oneSUSHI liquidity rewards on Sushiswap, distributed over 500k Ethereum blocks

Poll: Should we create oneSUSHI?

  • Yes (Create oneSUSHI, a stablecoin governed by Sushipowah)
  • No (Tether and Centre to continue providing 64% of Sushiswap stablecoins)

0 voters

  • There is downward pressure on the price of SUSHI every time SUSHI is swapped for one of these stablecoins.

How does this happen?Could you explain?

You need to purchase SUSHI to mint oneSUSHI. This purchase pressure partially offsets any swaps of SUSHI for oneSUSHI. There is nothing to offset the selling pressure when SUSHI is swapped for USDC/DAI/USDT/sUSD.

Ok, now I understand.
Using SUSHI to mint a stablecoin is a nice idea since it allows you to keep your exposure to SUSHI without selling it, but why we should have our own stablecoin?
Isn’t it easier to add SUSHI as a collateral on MakerDAO, with DAI already being an established stablecoin?

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DAI is a better economic option than USDC and USDT but here are four problems that make it inferior to oneSUSHI:

  1. you deposit more than $1 of value to get a DAI,
  2. there is no guarantee you will get $1 of value back when redeeming a DAI,
  3. SUSHI would just be one of dozens (or even hundreds) of collateral options - for example, Compound locks up $1.5B DAI and just $29k DAI have been minted with COMP, and
  4. the SUSHI paid into DAI is controlled by individual depositors. This can create a ‘run on the bank’ and is capital inefficient. SUSHI paid into oneSUSHI is a community governed treasury.

DAI is not a perfect currency but it’s an established and relatively well-known stablecoin.
I think DAI would be better than oneSUSHI because of its high adoption in the DeFi ecosystem: just think of yearn DAI vault or curve liquidity pools; trying to replicate DAI’s success might turn out to be a challenge we don’t really need now…for example if we choose to go with oneSUSHI we would have to incentivize some oneSUSHI pairs, with no warranty that other dApps will follow and adopt our coin.
I’m not trying to hate on oneSUSHI but in my opinion locking SUSHI to mint DAI is more appealing, because this would allow devs and grant recipients to hold their SUSHI without selling it, hence removing sell pressure…an entirely sushi backed stablecoin looks like overkill to me, but I’d like to hear your solution too.

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@zafalijadev I am also a big fan of DAI and attended a few of their earliest community calls four years ago. I’d even like to create a oneMKR in DAI’s honor! The problem is that DAI isn’t competitive enough against USDT and USDC for structural reasons. The lending market approach is too complicated and capital inefficient. You need the coin to be as stable against USD as USDC and Tether to take market share from them. DAI is down to 4% market share.

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At this point, I don’t think it should be a priority for Sushi to build a Stablecoin. IMO, there’s so much going on with initiatives like Bentobox, Onsen and Deriswap. Why spread ourselves thin? I feel that SushiSwap should dominate in a few key value offerings and revisit other horizontal expansion at a later time.

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@SushiAllDay Sushiswap wouldn’t be building it. ICHI would build it for Sushiswap. I will make that more clear in proposal.

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Thanks for the clarification. Will you please share more about ICHI’s background?

Do they specialize in creating stablecoins?

@SushiAllDay Yes, ICHI is a new protocol that is designed to enable any cryptocurrency to fuel its own complementary stablecoin. So far ICHI has made stablecoins for Bitcoin (oneBTC), Ethereum (oneETH), and Chainlink (oneLINK). The oneBTC, oneETH, and ICHI liquidity were moved to Sushiswap today. You can earn ICHI rewards by depositing to these pools: https://www.ichi.farm/#/farm

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I believe it would be more beneficial for SushiSwap to launch stable coins on top of BentoBox :slight_smile:

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You are right - oneSUSHI may even be more beneficial on Bentobox than Sushiswap. Compound locks up $1.5B DAI and only $29k DAI are minted with COMP. It would be better if the stable asset of choice on Bentobox locks up a lot of SUSHI!

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am voting no on this for now as i am unsure how scaleable ichi is for the moment, and if ever sushiswap ever needs to have its own stablecoin, it can do it in a more secure scaleable way on its own or under yearn. ICHI nonetheless is a very interesting project.

If ever tho that Sushiswap will make its own stablecoin, i propose calling it antei.

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Maybe consider a partnership with an established stablecoin protocol rather than creating one from scratch.

@SushiAllDay These partnerships trade price stability for SUSHI’s value locked and economic activity. You sell SUSHI to get these stablecoins and that hurts SUSHI’s price. ICHI is the first to provide a stability feature fueled by SUSHI. Also, why not do both? Partner with these stablecoins and create a oneSUSHI.

@SpockNimoy The simplicity of the stability mechanism makes it technically scalable and community governance makes it socially scalable. ICHI doesn’t require any complex lending markets or algorithms. You always mint/redeem for $1 of value just like with USDC/USDT. And, unlike these stablecoins, there is no single entity that hordes the value. Sushiswap is able to call it Antei, or any other name.

Hey @Masanobu_Fukuoka If you’re available on discord I’d love to have you on the sushi forum tonight (9PM PST… ~8 hours from time of writing) about ichi finance and your proposal for oneSUSHI! magicturtle#3057 on discord.
no pressure just let me know if you see this in time, thanks :slight_smile:

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Update: I dropped in and we decided to reschedule to next week to accommodate additional schedules. I hope many will be able to make it!

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Certainly an interesting proposal. Can you explain the peg mechanics? Ie how will depositing Sushi and USDC keep the peg at 1usd value? You also mention that Sushi wont be lost this way (as opposed to if sushi was a Maker collateral), how can this be so (if sushi went down 30% in a few days as an example).