⭐ Merited by bct_ail (1)
I am following Waves for a while now, and I am a big fan of the platform and like the direction it is going.
I have a number of questions regarding the new developments on the Waves platform and would like to assess and understand their intrinsic risks better, it would be great if somebody could provide more knowledge or point me to a FAQ (if it exists)
1) The Staking rewards for the LP tokens are pretty high right now. (Like 10-15% for BTC and ETH and >40% for USDC and USDT)
It is mentioned in the description of the Waves.exchange that the price of the LP tokens can never go down (however details are not mentioned). How is this possible? While logically this does make some sense to me for the stablecoins, I don't understand how this is achieved for volatile cryptos such as BTC or ETH? Is the liquidity there only provided to assets that are stable to BTC (or ETH respectively)? Or how is it done?
2) What are the risks of the Staking the LP coins? Of course I could imagine some sort of smart contract bug. Is there any other "black swan" event for those tokens? What would happen if for some reason the underlying asset goes down by 99%? What happens if the other side of the pair used for generating the stakes goes down 99%? What happens if ETH forks? (as most of the Staking is done on the ETH chain if I understood correctly)
3) Regarding the USDN tokens: They are backed entirely by Waves, is this correct? USDN has currently a backing ratio of ~2, so that way more Waves are locked than USDN are issued (in $). What would happen if Waves goes down by more than 50% and the backing goes below 100%? Would USDN fall below $1?
4) One last question about swop.fi. This looks like a great addition to the Waves platform and it also has a nice FAQ. However, I couldn't find how are prices made? The trading doesn't seem to go over the Waves.exchange directly (or does it? the prices don't match with the waves exchange orderbook though). For instance if I buy a huge amount of BTC for USDN on swop.fi, what exactly happens with the LP-pool? How does it balance the USDN and BTC amounts after the purchase? As there is the (deterministic?) AMM algorithm behind I wonder if this algorithm could be abused in some sort of attack, especially for the pairs with at least 1 non-stablecoin, for instance in a flash crash or sudden price jumps?
Thanks in advance and keep up the good work
I have a number of questions regarding the new developments on the Waves platform and would like to assess and understand their intrinsic risks better, it would be great if somebody could provide more knowledge or point me to a FAQ (if it exists)
1) The Staking rewards for the LP tokens are pretty high right now. (Like 10-15% for BTC and ETH and >40% for USDC and USDT)
It is mentioned in the description of the Waves.exchange that the price of the LP tokens can never go down (however details are not mentioned). How is this possible? While logically this does make some sense to me for the stablecoins, I don't understand how this is achieved for volatile cryptos such as BTC or ETH? Is the liquidity there only provided to assets that are stable to BTC (or ETH respectively)? Or how is it done?
2) What are the risks of the Staking the LP coins? Of course I could imagine some sort of smart contract bug. Is there any other "black swan" event for those tokens? What would happen if for some reason the underlying asset goes down by 99%? What happens if the other side of the pair used for generating the stakes goes down 99%? What happens if ETH forks? (as most of the Staking is done on the ETH chain if I understood correctly)
3) Regarding the USDN tokens: They are backed entirely by Waves, is this correct? USDN has currently a backing ratio of ~2, so that way more Waves are locked than USDN are issued (in $). What would happen if Waves goes down by more than 50% and the backing goes below 100%? Would USDN fall below $1?
4) One last question about swop.fi. This looks like a great addition to the Waves platform and it also has a nice FAQ. However, I couldn't find how are prices made? The trading doesn't seem to go over the Waves.exchange directly (or does it? the prices don't match with the waves exchange orderbook though). For instance if I buy a huge amount of BTC for USDN on swop.fi, what exactly happens with the LP-pool? How does it balance the USDN and BTC amounts after the purchase? As there is the (deterministic?) AMM algorithm behind I wonder if this algorithm could be abused in some sort of attack, especially for the pairs with at least 1 non-stablecoin, for instance in a flash crash or sudden price jumps?
Thanks in advance and keep up the good work