FUSD optimization
So far, it’s been fantastic, and we have a high demand for FUSD; we see an issue in the future if we want to grow FUSD and Flamingo that we should solve in time: Rewards and risk of a buyer vs. Rewards and risk of a borrower.
As a buyer, you can today buy FUSD at a premium since the supply is low, and you can stake to get the same rewards as a lender. You don’t need to care about interests or margin maintenance, your only concern as a staker is Impermanent loss.
As a borrower, you need to collateralize at least three times the value of your assets, pay interest to the platform, and care about the price of your collateral as it might be margin maintained. You can stake and get the same rewards as a buyer, but you need 2.25x more liquidity to get the same rewards, and at the same time, you take more risk and benefit the platform even more by collateralizing your assets to increase the Market Cap of FUSD.
As a holder, you want a stablecoin worth 1 USD to later buy crypto with; as a holder, you want the price of your stable asset to be stable.
We want to make the borrower and the buyer have the same reward adjusted for risk and, at the same time, make the platform grow faster as the supply increases.
How?
The rewards for FUSD pools will be split into two: normal rewards and borrower’s rewards.
The normal reward will be given to everyone who stakes, whether you have borrowed FUSD or not, and will be a percentage of the total rewards given to the pool. Right now, we are thinking 20–25%.
The borrower’s rewards will be the remaining percentage of the rewards (75–80%). To receive borrower’s rewards, users will have to have borrowed FUSD. The amount of borrowed FUSD combined with the amount of LP tokens staked will determine the share of the borrower’s rewards a user will get. The exact algorithm will be published at a later time.
How does it help?
It will make it more attractive to lend FUSD, building up the supply of FUSD so Flamingo can handle adding extra utility for FUSD without the token’s price going up.
When?
It will take some time (weeks) to get done.
What should I do?
Nothing, but we recommend you keep yourself updated on announcements coming in the following weeks.
If you want FUSD we recommend borrowing it for the time being instead of buying it at an overpriced rate.
A short path to making a stablecoin is relying on other stablecoins. Still, we do not want to take that path simply because most stablecoins rely on centralized financial institutions in different ways. We aim to build the world’s first truly decentralized stablecoin and, therefore, have to find new and innovative paths without centralized influence.
Flamingo Finance is an easy-to-use DeFi platform built on Neo N3. Designed with Smart Functions for everyone, from beginners to advanced cryptocurrency users. https://flamingo.finance/
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