5 ms·

Beanstalk: A Decentralized Credit Based Stablecoin Protocol

41 points by nsomani 5y ago

wumion999 5y ago
This is really interesting
yuppie_scum 5y ago
Probably going to cause some confusion with AWS Elastic Beanstalk,
- wallacoloo 5y ago
  or not, if the overlap between AWS and crypto devs/users is small.
  - pcthrowaway 5y ago
    The overlap between crypto devs and AWS users is in fact very high.
    - lofties 5y ago
      [citation needed]
      - deleted 5y ago
        [deleted]
- withinboredom 5y ago
  Or beanstalkd
- bradhensen 5y ago
  I strongly agree with this one, too hard to distinguish if you're coming both from the tech space
xony 5y ago
bonelessfrog 5y ago
Why are you using Uniswap as a price oracle? Isn't that ill advised especially with a TWAP methodology, an exchange with a low volume can easily be manipulated by someone with not-even-that-deep of pockets.
- pcthrowaway 5y ago
  I think low-liquidity rather than low volume would be the issue, and TWAP helps smooth that out somewhat (a price spike due to a large trade wouldn't immediately change the TWAP, and arbitragers would then bring price back to parity with other pools). It would be ill-advised to use low-liquidity tokens for the credit rating however, I'm not sure how this is addressed by the beanstalk protocol because I didn't do a thorough reading yet. But if you're establishing something similar to a credit score based on an account's crypto assets, it would be unusual to factor in their holdings of tokens which might have very low liquidity, things like NFTs, etc.
wallacoloo 5y ago
so when the price of beans is low -- i.e. when there's more bean supply than there is demand -- the protocol tries to spur demand by increasing bean-denominated yield for beans ("weather"). the downstream effect of this is to further increase supply. and so the supply/demand imbalance that led to lower-than-$1 value persists (or will occur later, as the supply grows over time). there's a million different ways to look at a system like this, and tbh i'm sort of drowning in the metaphors ("pods", "stalk", "weather", etc). is there a more convincing argument for how the protocol deals with the bean value < $1USD scenario?
- austinmoninger 5y ago
  I think you're on the right track regarding increasing the "weather" when the price is below the dollar peg — however this isn't quite to spur demand, it is to remove beans from circulation. This is what happens when you "sow beans", the protocol burns them and in exchange you get a locked-in interest rate (in pods), and you get paid out when all the lenders in front of you (the pod line) get paid out. (and again, this is an activity that is incentivized when bean price is below $1 in order to bring the price back up) Admittedly, the metaphors can get dense but personally once I started to wrap my head around it they were quite helpful!
  - wallacoloo 5y ago
    > This is what happens when you "sow beans", the protocol burns them and in exchange you get a locked-in interest rate (in pods), and you get paid out when all the lenders in front of you (the pod line) get paid out. ohh, i misunderstood the lockup conditions around lending. so the protocol properly does decrease circulation. still at the expense of an increased maximum supply, but with the rate at which that new supply enters circulation controlled for independently (by the "bean supply"). i don't see any mechanism to decrease the maximum supply. over the very long term, it seems that the system becomes increasingly unstable the longer that the bean demand growth is below the Weather rate. the bean demand growth ought to have some resemblance to the general rate of return, so the uncertain thing here is: will lenders lend at advantageous rates to Beanstalk after it establishes itself as a good creditor? or will lenders demand an outsized return for lending to Beanstalk, on account of their money being locked up for an indeterminant duration? i see arguments for both, but it's pretty academic: it looks like there's enough runway in the system that these "very long term" preponderances are mostly irrelevant in this stage of defi. interesting project.
vinceharris 5y ago
I think Bean’s ambition to be a 0 or extremely low interest lender is what got me really interested. They’re going to get there through a decentralized liquidity pool then attract creditors.
saltdoo 5y ago
I tried search the symbol (Bean Logo1) and it didn't give me the correct results on google. This seems problematic for a stablecoin.
gstenger 5y ago
Wow, this makes so much sense. Beanstalk really could become the de facto algorithmic stablecoin.

41 points by nsomani 5y ago

wumion999 5y ago

This is really interesting

yuppie_scum 5y ago

Probably going to cause some confusion with AWS Elastic Beanstalk,

wallacoloo 5y ago
or not, if the overlap between AWS and crypto devs/users is small.
- pcthrowaway 5y ago
  The overlap between crypto devs and AWS users is in fact very high.
  - lofties 5y ago
    [citation needed]
    - deleted 5y ago
      [deleted]
withinboredom 5y ago
Or beanstalkd
bradhensen 5y ago
I strongly agree with this one, too hard to distinguish if you're coming both from the tech space

xony 5y ago

bonelessfrog 5y ago

Why are you using Uniswap as a price oracle? Isn't that ill advised especially with a TWAP methodology, an exchange with a low volume can easily be manipulated by someone with not-even-that-deep of pockets.

pcthrowaway 5y ago
I think low-liquidity rather than low volume would be the issue, and TWAP helps smooth that out somewhat (a price spike due to a large trade wouldn't immediately change the TWAP, and arbitragers would then bring price back to parity with other pools). It would be ill-advised to use low-liquidity tokens for the credit rating however, I'm not sure how this is addressed by the beanstalk protocol because I didn't do a thorough reading yet. But if you're establishing something similar to a credit score based on an account's crypto assets, it would be unusual to factor in their holdings of tokens which might have very low liquidity, things like NFTs, etc.

wallacoloo 5y ago

so when the price of beans is low -- i.e. when there's more bean supply than there is demand -- the protocol tries to spur demand by increasing bean-denominated yield for beans ("weather"). the downstream effect of this is to further increase supply. and so the supply/demand imbalance that led to lower-than-$1 value persists (or will occur later, as the supply grows over time). there's a million different ways to look at a system like this, and tbh i'm sort of drowning in the metaphors ("pods", "stalk", "weather", etc). is there a more convincing argument for how the protocol deals with the bean value < $1USD scenario?

austinmoninger 5y ago
I think you're on the right track regarding increasing the "weather" when the price is below the dollar peg — however this isn't quite to spur demand, it is to remove beans from circulation. This is what happens when you "sow beans", the protocol burns them and in exchange you get a locked-in interest rate (in pods), and you get paid out when all the lenders in front of you (the pod line) get paid out. (and again, this is an activity that is incentivized when bean price is below $1 in order to bring the price back up) Admittedly, the metaphors can get dense but personally once I started to wrap my head around it they were quite helpful!
- wallacoloo 5y ago
  > This is what happens when you "sow beans", the protocol burns them and in exchange you get a locked-in interest rate (in pods), and you get paid out when all the lenders in front of you (the pod line) get paid out. ohh, i misunderstood the lockup conditions around lending. so the protocol properly does decrease circulation. still at the expense of an increased maximum supply, but with the rate at which that new supply enters circulation controlled for independently (by the "bean supply"). i don't see any mechanism to decrease the maximum supply. over the very long term, it seems that the system becomes increasingly unstable the longer that the bean demand growth is below the Weather rate. the bean demand growth ought to have some resemblance to the general rate of return, so the uncertain thing here is: will lenders lend at advantageous rates to Beanstalk after it establishes itself as a good creditor? or will lenders demand an outsized return for lending to Beanstalk, on account of their money being locked up for an indeterminant duration? i see arguments for both, but it's pretty academic: it looks like there's enough runway in the system that these "very long term" preponderances are mostly irrelevant in this stage of defi. interesting project.

vinceharris 5y ago

I think Bean’s ambition to be a 0 or extremely low interest lender is what got me really interested. They’re going to get there through a decentralized liquidity pool then attract creditors.

saltdoo 5y ago

I tried search the symbol (Bean Logo1) and it didn't give me the correct results on google. This seems problematic for a stablecoin.

gstenger 5y ago

Wow, this makes so much sense. Beanstalk really could become the de facto algorithmic stablecoin.