Most of you are probably aware of Meld Gold project from the same Devs and VCs behind Algomint. I would love to see the core Algofi team make contact and seek new Collateral, lending, borrowing and LP options for Gold and Silver on Algofi ( if they have not done so already). The Dao could support with BANK rewards (as significant governor I would support this). The USD pair to choose is more complicated. I think USDc would be preferred by neutral audience, but GoUSD is Algomints, and STBL2 for algofi. Reasons why adding precious metals is worth supporting by Algofi:
Growth of new audiences and valuable source of new liquidity:
Precious metal trading is a very popular activity with professional and amateur investors.
It will be an attractive alternative crypto store of value with de-dollarization global trends and worries over US economy.
With a trustless bridge in place soon to most of the crypto liquidity (London bridge release), Algofi will need distinctive offering to attract liquidity, not just Usd based Defi which Ethereum has in plenty already.
Tokenized Precious metals is another great RWA (real world asset) utility use case for Algorand (when it has proper custodial protections with trustworthy jurisdiction like Meld has under Australian law). Tokenized gold tracking to the gold price will be one of simplest ways to hold and trade with reassurance of redeemable real assets behind it.
Collateral factor could be reasonably high with safety.
It’s a great marketing vehicle for Algofi into huge markets like Middle East who love holding gold and are very crypto friendly.
It will be a popular alternative to USD stable coins in countries where local currency inflation is high…
I know Meld has an early partnership with Pact for GoUSd pairs, but putting Meld together with Algofi has to be the more ambitious play for both parties…
Fellow govs, please bring up any concerns you might have that the above does not consider. At least I hope core team will see this note and evaluate fully, especially now they are 100% focussed on Algofi again.
Wouldn’t you need to hold actual bonds for the gold/whichever in a bank to be able to trade them for crypto?
My understanding that crypto brokers and financial providers offer you options to buy crypto-gold (like Revolut or Swissborg, cause they are basically the size of a bank themselves, are centralized, and can purchase and hold either the physical asset or the bond attached to it, for you, as collateral for the crypto of that asset that they sold you
I love the idea of tokenized metals as collateral but the last time I checked meld’s page there was no clear documentation on where the gold is stored and where/if it can be redeemed. Has there been some progress?
It’s a bit buried on their site, but it’s “Imperial Bullion” headquartered in Australia:
I recall them mentioning you can redeem it with them currently, but were working on adding more global distribution partners so you would not need to travel to Australia to redeem it (if you chose to).
Regarding the USD pair, because of the Algofi router if the pairing was STBL2/GOLD you could trade them for cheaper fees as USDC → GOLD. This is because the fees on STBL2 lending pools is half that of normal LPs (0.125% vs 0.25%) so a double hop from USDC → STBL2 → GOLD would cost the stable swap fees (0.1%) and the Lending Pool fees (0.125%) which come out to 0.225%. You could also use the cheaper routing between any other lending pool (goBTC, goETh, BANK etc). To me, pairing them with STBL2 has the most benefit to both Algofi and the user.
But that means for me that their assets are not ready yet to be used as collateral sadly. If there is no relatively easy way to redeem it then liquidations are not ensured to be profitable and thats a huge security risk imo
The points about redemption options are all valid. I believe Meld are trying to patent some things and get partners in different jurisdictions which I presume is focussed on redemptions. I just hope Algofi team are considering this for its innovative qualities. Would only want them to proceed when it passes all necessary due diligence for use as collateral.
imo opening lending pools first could be the first step on listing new tokens that dont have the necessary liquidity yet, but could be already incentivizeed that way. and the vote would be on a plan with steps that would be implemented if some liquidity levels are hit like for example:
open lending pool ASSET-STBL2
if 500k liquidity is hit launch lending market for asset with cf=0 and borrow limit =…
if 1M liquidity is hit change cf to 50% and and borrow limit to …
I agree. This sounds like a sensible stepped approach for adopting new assets.
Back on Meld, for now I would just like core algofi team to reach out to them and to find out their roadmap and if there is potential for a tie up, perhaps with joint incentives etc down the line. I appreciate all the feedback from diff governors in meantime with valid points, on strength of redemption rights etc.
Yes in that sense you are very welcome to ask them too, its prb just easier for the dev team to represent algofi governor’s at this point whilst there is a lot more devlpmt still to happen on the platform. It’s still very early days. The dev team are significant bank holders too. And we have the voting mechanisms in place to ratify proposals put out to governors for any significant decisions to be made. It’s more a practical thing suggesting they reach out as closest thing to mgmt team still. Personally, I think the guys leading the algofi devs are very capable and it’s one of main reasons i decided to commit to the platform as bank holder and governor. They may be happy to coordinate with you in conversations like this if you make any headway with meld.
I like the idea to add gold and silver to the dex on algofi. However right now there’s huge incentives on the pairs on pact right now so it’ll be difficult to attract more liquidity.
Regarding having them as collateral, it would be good in the long run if they satisfy the requirements but rn it is not clear how gold and silver are backed by meld and it seems to early to have them on the lending platform.