Beanstalk: A Decentralized Credit Based Stablecoin Protocol
bean.money
bean.money
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?
(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!
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.
One would think that once Beanstalk has an even more robust credit history, lenders with lower risk profiles would be even more inclined to lend to Beanstalk! Once you have a sufficient credit history I don't think the "indeterminate" lock up period will be a deterrent (that's what high weather helps mitigate in the near term).
The protocol is in a debt cycle right now (as indicated by the market cap being $50M while the pod line of lenders is $390M), but in the long run the debt level should be much more reasonable and the market cap will be significantly larger than the pod line.
> interesting project.
Agreed! There are a lot of new, interesting aspects to this specific algo stablecoin that I haven't seen before. And the best part is that it's working! All other non-collateral algo stablecoins failed within a month (like ESD, Basis Cash, etc), but Beanstalk has been chugging along for 4-5 months now. I think the Lindy effects are strong here.
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.