65
edits
Difference between revisions of "Fiat DAO"
Jump to navigation
Jump to search
formatting
m |
0xBigDaddy (talk | contribs) (formatting) |
||
| Line 1: | Line 1: | ||
[https://fiatdao.com/ Fiat DAO] is a leveraging protocol for DeFI native fixed income assets that was implemented on the Ethereum blockchain. The goal of Fiat DAO is to be the first on chain repurchasing (repo) market for fixed income assets. A financial transaction is made in which one party (the user) deposits collateral with a promise to repurchase the collateral at a later date. Fiat DAO will enhance secondary market liquidity for cash markets such as fixed income assets like zero coupon bonds by acting as a market maker for the underlying in a capital efficient manner not currently available in decentralized finance. A healthy repo market makes available the necessary funds to allow the secondary markets to perform effectively. Investors of this asset class are thus able to efficiently and safely gain leverage and issuers are able to benefit from reduced funding costs. $FIAT itself stands for Fixed Income Asset Token which was developed as an instrument to represent an over collateralized claim against collateral deposited. | |||
[https://fiatdao.com/ Fiat DAO] is a leveraging protocol for DeFI native fixed income assets that was implemented on the Ethereum blockchain. The goal of Fiat DAO is to be the first on chain repurchasing (repo) market for fixed income assets. A financial transaction is made in which one party (the user) deposits collateral with a promise to repurchase the collateral at a later date. Fiat DAO will enhance secondary market liquidity for cash markets such as fixed income assets like zero coupon bonds by acting as a market maker for the underlying in a capital efficient manner not currently available in decentralized finance. A healthy repo market makes available the necessary funds to allow the secondary markets to perform effectively. Investors of this asset class are thus able to efficiently and safely gain leverage and issuers are able to benefit from reduced funding costs. $FIAT itself stands for Fixed Income Asset Token which was developed as an instrument to represent an over collateralized claim against collateral deposited. | |||
== '''History''' == | |||
Fiat DAO is the brainchild of a team of core contributors Nils, Johannes, Max and Daniel. Many of whom had been contributors of [https://barnbridge.com/ Barnbridge DAO] and were intimately familar with the Smart Yield product utilizing senior and junior tranches that represent fixed and variable yield products. It was clear to the creators that the problem with fixed income assets like zero coupon bonds lies in the illiquid nature of the asset itself. Essentially there was no secondary market available in which the user could bring this class of asset to the lending market as collateral and develop leverage for fixed income. The lack of an available secondary market represents a lost opportunity cost until maturity of the asset. The founders recognized the problem of poor capital efficiency was not just an issue that exists at Barnbridge but a problem that exists across all of DeFI and also a problem that traditional finance has addressed already with the development of repo markets. So as a consequence, in the 4th quarter of 2021, seed investors and the core team had begun work to bridge this gap in DeFI and develop a repo market in DeFI that would allow fixed income to become a superfluid collateral at high LTV ratios not currently seen. | Fiat DAO is the brainchild of a team of core contributors Nils, Johannes, Max and Daniel. Many of whom had been contributors of [https://barnbridge.com/ Barnbridge DAO] and were intimately familar with the Smart Yield product utilizing senior and junior tranches that represent fixed and variable yield products. It was clear to the creators that the problem with fixed income assets like zero coupon bonds lies in the illiquid nature of the asset itself. Essentially there was no secondary market available in which the user could bring this class of asset to the lending market as collateral and develop leverage for fixed income. The lack of an available secondary market represents a lost opportunity cost until maturity of the asset. The founders recognized the problem of poor capital efficiency was not just an issue that exists at Barnbridge but a problem that exists across all of DeFI and also a problem that traditional finance has addressed already with the development of repo markets. So as a consequence, in the 4th quarter of 2021, seed investors and the core team had begun work to bridge this gap in DeFI and develop a repo market in DeFI that would allow fixed income to become a superfluid collateral at high LTV ratios not currently seen. | ||
== '''Overview''' == | |||
'''Overview | |||
At a high level, Fiat DAO consists of two ERC-20 tokens that represent both a governance token and an algoarithmic token that is minted against deposited collateral. The FDT token is our governance token which when staked in the DAO will allow participants to oversee direction and provide stewardship of the project. FIAT, as mentioned before, is essentially a claim against deposited collateral and looked upon as a floating token that is not net pegged to the dollar but instead will fluctuate with the prevailing discount rate. If $FIAT is trading above $1 then this will decrease both the collateral ratio and thus LTV and when $FIAT is trading below the $1 will in turn increase the collateral ratio and increase LTV. Because of the illiquid nature of fixed income assets, a rapid expansion or redemption of collateral at scale makes a floating "stablecoin" better suited for the fixed income market. | At a high level, Fiat DAO consists of two ERC-20 tokens that represent both a governance token and an algoarithmic token that is minted against deposited collateral. The FDT token is our governance token which when staked in the DAO will allow participants to oversee direction and provide stewardship of the project. FIAT, as mentioned before, is essentially a claim against deposited collateral and looked upon as a floating token that is not net pegged to the dollar but instead will fluctuate with the prevailing discount rate. If $FIAT is trading above $1 then this will decrease both the collateral ratio and thus LTV and when $FIAT is trading below the $1 will in turn increase the collateral ratio and increase LTV. Because of the illiquid nature of fixed income assets, a rapid expansion or redemption of collateral at scale makes a floating "stablecoin" better suited for the fixed income market. | ||
== '''Operational''' == | |||
'''Operational | |||
| Line 26: | Line 18: | ||
'''Sources:''' | == '''Sources:''' == | ||
# https://medium.com/fiat-dao/fiat-what-is-it-good-for-c3dd0de98f78 | # https://medium.com/fiat-dao/fiat-what-is-it-good-for-c3dd0de98f78 | ||
# https://gov.fiatdao.com/static/media/fiat-lux-manuscript.ee94825d.pdf | # https://gov.fiatdao.com/static/media/fiat-lux-manuscript.ee94825d.pdf | ||
# https://medium.com/fiat-dao/fiat-dao-raises-2m-seed-round-to-empower-defi-fixed-income-4844134636ed | # https://medium.com/fiat-dao/fiat-dao-raises-2m-seed-round-to-empower-defi-fixed-income-4844134636ed | ||
# https://www.sifma.org/resources/research/us-repo-market-chart-book/ | # https://www.sifma.org/resources/research/us-repo-market-chart-book/ | ||
[[Category:Protocols]] | |||