[bisq-network/proposals] Implementing Bisq DAO with RSK (#276)

[ManuFerrari]

> @ManuFerrari Thanks for the info and links.
> My main problem with stable coins is that I have never seen one so far being honest with the question who pays the costs for the pegging. A peg is a hedge and some party takes the risk for a fee. That is fine as long it is transparent. But all stablecoins I know are free to use, so the user who benefits from the stability (hedge) does not pay the costs. Who pays it?

Yes. I know. Many projects blow out in the past. And I do agree that not all are transparent.

moneyonchain protocol was build by Bitcoiners mainly having in mind Bitcoiners needs. Bitcoiners who do not like centralized not censorship resistant Stablecoins, but still need to use one might be interested on DoC.

Regarding your question on costs, I would like to reformulate, on what are the incentives (there are some costs for using the protocol, 0,1% for minting/redeeming tokens).

 In the case of DoC, the volatility not wanted is give it away to BPRO holders (who are willing to get that free leverage).

 In the case of a black swan of a 90% percent crash in the price of BTC in 1 hour the system might have  a liquidation, in that case BPRO holders loose their BTC and the DOC holders receive rBTC equivalent to USD holding in DOC at the moment of liquidation. The model is high over collaterallizated. Before launching the protocol we runned thousands of simulations and set parameters highly conservative to avoid any liquidation scenario. Now the protocol is running in an alpha version, next version will avoid liquidations completely. But yes there is a black swan event scenario on which BPRO liquidation is possible. It is not ecommended to add a high proportion of your BTCs to the protocol if you are going to provide liquidity (the BPRO holders adds the líquidy to the protocol).

The model showed to be very robust. None of the mechanisms established to be activated in case of big BTC price crash were activated on the March 13 crash, the largest crash in price of BTC in a short period in the last 7 years. Other Stablecoins models backed by "crypto" crashed that day. Here more info about this: https://medium.com/moneyonchain/money-on-chain-march-13th-crypto-downfall-analysis-253e6b93a7df


> Usually the investors who don't fully understand the scheme. I talk from own experience when I invested in an early stablecoin (NuBit) via NuShare and got burned for my mistake to not study how it really works before putting money in. It worked pretty good until BTC went on a mega really and then it collapsed.

As mentioned, the protocol is highly colateralizated. The team been in Bitcoin space since early days. We know NuBit and we studied all models available before inventing our model. We simulated all bitcoin history past volatility. Even with higher volatility the model should have no problem in next crash after current bull run. I would say that main innovation in moneyonchain protocol is the financial model behind the protocol. Most risk on BTC price crashes is assumed by traders doing leveraged (BTCX) operations. And traders that do 2x leverage operations knows that if price of BTC goes down 50% the position will be liquidated. 
> 
> So please don't misunderstand me, I find stable coins an important instrument, and I don't know anything about DOC, so not implying anything, just genuinely interested in an answer to my above question (who pays the costs). The reason I count most stable coins as casino or max. as "another form of fiat" is because they are usually built on (for investors) hard to understand concepts (thus it is a high risk investment) and because they are not trust-minimized/decentralized (you have to trust the issuer/managers thus its just a private form of the FED). 

In the case of moneyonchain protocol the bitcoiners are the ones that mint the DoC or the BPRO or the BTCX. Bitcoiners interact with the protocol. The only way to mint DoC is for a user to send rBTC to the protocol. 

>This second element makes it also nearly guaranteed to fail once it becomes successful. Libra has shown how the government react when they felt challenged. Tether is still too small to be relevant for their attention but they will face a similar end IMO. The last holder will regret at some point realizing that 1 USDT is not 1 USD.

In case of Moneyonchain there is no bank accounts. Only bitcoin as collateral/protocol. Smart contracts are running on RSK network, secured by Bitcoin Miners.

There is two centralization points now: 
1) upgrades on the protocol
2) Oracles

Regarding 1 there is going to be an issuance of MoC tokens that will provide Decentralized governance on upgrades on the protocol (and other features, as holders being able to get most of the fees charged by the protocol for its usage, etc).

Regarding 2  Decentralized oracles will be launched in the following weeks. Current version are "semi Decentralized" (more than one node feeding prices to the protocol).

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