Development unWrapped: Q1 2023
Welcome unFederal agents and newcomers,
2023 is turning out to be a great year for collaboration with other Web3 projects, and we have lots of awesome things planned for our line of products. This year, we’ve enjoyed increased subscribers and content viewing on Youtube and Twitter throughout the year, reinforcing the belief that the general public’s appetite to truly displace centralized banks is getting hungrier. The market witnessed the protocol layer from 2012 to 2017 and the “dev layer” from 2018 to today. Now, markets want to see the application layer and that is where we play best.
We see the bank closures, impending recession and disruption to traditional credit markets as positive indications that innovative solutions that find value by reducing costs of capital will gain more and more traction. We are concerned about the ability of innovators to fund and stay solvent in present conditions, but are optimistic that good projects will find the funds they need to survive, and the good ones, like unFederalReserve, will thrive.
In the first Development unWrapped of the year, we’ll look at:
- Artificial Intelligence (AI) Interest Rate Models on ReserveLending
- Introducing ReserveStaking and Staked ETH as Collateral
- QuickTake Content Program
- ReserveLending Adding Other Country’s Stablecoins
- ReserveLending+ Adds New Stablecoins Supporting International Banking
As we approach our sixth anniversary, I am so grateful to be at the forefront of banking innovation with you. Only together are we stronger, and the $eRSDL family will always be the best community in Crypto.
- Howard, CEO
QuickTake Content Program
Join us on Youtube for our weekly take on relevant regulatory and judicial action in the crypto sphere. Come check out any one of our reviews of the latest legislation, court orders and other matters critically important to the digital asset industry. You’ll want to hear about this:
- SEC’s Letter to Companies Holding Crypto
- FDIC OCC JAN 23 Joint Statement
- IRS Sec 165 Losses Zombie Projects
- NYDFS Insolvency Jan23
- Fed Board of Governors 9(13) Policy Update
- Underwood vs Coinbase — Motion to Dismiss
- Kraken vs SEC
- SEC Proposal — Safeguarding Client Assets — Part I
- SEC Proposal Part II
- SEC Proposal Part III
- Silvergate “The Last 10Q” Review
The next trillion dollars into crypto is coming from institutions and the U.S. is going to be front-and-center regarding any developments loosening or tightening the digital asset market. Here is where you will get summaries of the pending and active regulation, court cases and even some teaching moments on what affects markets behind the scenes. Please like and subscribe to our YouTube channel today!
Artificial Intelligence (AI) Driven Interest Rate Models
Over-collateralized borrowing is subject to many of the same types of risk as unsecured or partially secured financing. Yield fluctuations, counterparty risk, fraud and other large systematic risks are present and cannot be fully hedged or mitigated.
An exception to these issues is through the risk enhancement feature known as over-collateralized borrowing. Properly priced and protected, most counterparty-specific risk is covered. Risks do remain with respect to the sovereign risk of operating a platform or the risk of collateral failure entirely. We mitigate the first risk by operating within the regulatory guidelines of the jurisdictions where we play, and the second by using the pricing oracles and limiting platform tokens to Tier 1 and Tier 2 crypto collateral.
The price of risk is where we will rely on Artificial Intelligence and machine learning to speed up our analysis and improve our market precision. Supply APYs (aka. yield for deposits) and borrow APYs (aka. loan rates) reflect the current market price for risk.
There are two data sets to consider when establishing supply and borrow APYs. The first dataset is trend data based on our platform’s historical experience. The second dataset compares point-in-time data; namely, our rates, utilization and other factors versus our competitors at the same moment.
Luckily, both datasets are on-chain and easily digested by the leading AI and machine learning companies today.
With the help of A.I. Blockchain, a globally recognized leader in the nascent blockchain AI industry, ReserveLending will incorporate the system’s recommended variables for collateral factor, growth rate, kink rate, reserve amount and other factors. The result will be unFederalReserve having industry-leading intelligence driving its customer experience.
How does ReserveMind sound?
Implementation of results produced through deep data retrieval, meta-analysis and machine learning will keep ReserveLending offering the most competitive rates in the market. All the while, it will inform and educate users on how it sees the broader markets translating risk into cost.
Diagram I: The Factors Which Drive Supply and Borrow APYs
By 2025, we hope to incorporate economic prediction data into the models, so that ReserveMind will inform us of key variable selection based on where it sees risk and price heading and not just based on where its been.
Using data from our competitors and tracked daily supply and borrow volumes of key tokens, our interest rate models will feature dynamic pricing features to make smart rate moves. Our predictive models will position ReserveLending to always offer the best market supply and borrow rates depending on the utilization of the pools at that time.
ReserveLending Expanding Its Stablecoin Pools
We foresee a markets challenge related to stablecoins. The predominant index currency for stablecoins are U.S. dollars (USD). As a global index currency, USD enjoys acceptance around the world. Large, asset-intensive industries that operate across jurisdictions often manage multiple currencies and hedging functions. Asset-Liability Committees (ALCOs) find themselves juggling, not only the term structure of most balance sheets but also, the forex risk.
Working with the Stablecoin Standard, an organization comprised of 20 global currency stablecoins formed to create an international standards body, unFederalReserve’s due diligence and decision to add or remove a particular stablecoin from the self-custodial ReserveLending platform, will be based on all available information as it becomes available.
Diagram II: ReserveLending+ Adds New Stablecoins Supporting International Banking
Digital asset ecosystems are beginning to mirror their traditional finance complements san intermediaries. These systems rely on fiat currency digital markers to function.
As pure 1:1 reserve stablecoin companies develop to match existing global currencies, unFederalReserve will be there to offer large-scale multi-currency users a place to save, borrow and earn. Below find a sample screenshot of EUROC, a Circle-sponsored EUR stablecoin, data.
If done correctly, ReserveLending and its global liquidity pools will be seen as a safe and reliable mechanism for hedging currency risk on a self-custodied basis. We look forward to launching this functionality on our retail platform as well as our institutional DeFI platform, ReserveLending+.
We’re excited to announce the biggest product launch since ReserveFunding and ReserveLending+!
unFederalReserve’s latest product offering allows users to join multiple validator pools from one location. Join us in celebrating the launch of:
The initial product offering will allow users to stake into LIDO or Stakewise pools from the same site which they currently use to supply/borrow; namely, ReserveLending and invest in tradfi deals, ReserveFunding. In addition to adding a staking function, users will be able to supply and borrow stETH and sETH2 on ReserveLending or use it to invest in traditional LP funds through ReserveFunding.
We are initiating discussions with Stakewise to be their provider of institutional-grade staking capabilities by integrating qualified custody as an escrow provider to the self-custody landscape.
Here are some of the product-ready pages on display for your reference and enjoyment.
Image I: Staking ETH
Using our livery and the functionality of the LIDO smart contract, our tools provide transparency and information in a user friendly format.
Image II: Rewards Page
We know it’s “all about the Benjamins” after-all. Our Rewards page keeps stakers up to date on the performance of their position. As time progresses and based on demand, we’ll offer similar access to other validators and/or launch a validator node ourselves all using these primary rails. We continue to deliver on the one-stop shop for DeFI experience users have been asking for.
While challenges and volatility rock traditional banks and economies, the use case for self-custodial digital asset management only improves. There are still some basic improvements in transaction rules, products and the transfer of assets for crypto that can and will be realized in time. These product additions and unFederalReserve’s increasing relevance in DeFI markets bode well for our project followers.
More to come, so watch this space…
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