Read on Twitter
1/ ELI5 thread on Reflexer Labs’ $RAI 
TL;DR: Reflexer Labs has designed a governance-minimized version of Maker where, in the first iteration, $ETH is used as collateral to create $RAI -- a more stable version of $ETH.
TL;DR: Reflexer Labs has designed a governance-minimized version of Maker where, in the first iteration, $ETH is used as collateral to create $RAI -- a more stable version of $ETH.
2/ What problem is $RAI solving?
Maker & Compound recently introduced support for $USDC and $USDT -- decisions critiqued by some due to the counterparty risk that crypto dollars come with.
It's evident that trustless and stable collateral is needed in DeFi.
Enter $RAI.
Maker & Compound recently introduced support for $USDC and $USDT -- decisions critiqued by some due to the counterparty risk that crypto dollars come with.
It's evident that trustless and stable collateral is needed in DeFi.
Enter $RAI.
3/ How does it work?
$RAI is a more stable version of $ETH and it’s maintained through algorithmic governance.
The protocol adjusts rates autonomously via a PID controller that monitors the deviation between $RAI ’s market vs. redemption price.
$RAI is a more stable version of $ETH and it’s maintained through algorithmic governance.
The protocol adjusts rates autonomously via a PID controller that monitors the deviation between $RAI ’s market vs. redemption price.
4/ PID controller explained:
- Proportional: adjust rates based on the size of the deviation
- Integral: adjust rates based on the time length of the deviation
- Derivative: adjust rates based on how fast the deviation is growing/shrinking
- Proportional: adjust rates based on the size of the deviation
- Integral: adjust rates based on the time length of the deviation
- Derivative: adjust rates based on how fast the deviation is growing/shrinking
5/ PID controllers are already applied within traditional monetary policy:
Current central bank monetary policy rules are approximations of PID controllers.
Reflexer is applying a PID controller to build a trust-minimized collateral asset for DeFi.
https://www.imfs-frankfurt.de/fileadmin/user_upload/Events_2018/MMCI_Conference/Papers/09-Raymond_Hawkins-Monetary_Policy_and_PID_Control.pdf
Current central bank monetary policy rules are approximations of PID controllers.
Reflexer is applying a PID controller to build a trust-minimized collateral asset for DeFi.
https://www.imfs-frankfurt.de/fileadmin/user_upload/Events_2018/MMCI_Conference/Papers/09-Raymond_Hawkins-Monetary_Policy_and_PID_Control.pdf
6/ Why now?
DeFi aims to make finance cheaper, safer, and more accessible.
Oom change often requires regulatory arbitrage --> trustless collateral assets need to be available.
E.g. @AugurProject & @fluxprotocol could benefit from $RAI. https://twitter.com/hasufl/status/1261666060354441218
DeFi aims to make finance cheaper, safer, and more accessible.
Oom change often requires regulatory arbitrage --> trustless collateral assets need to be available.
E.g. @AugurProject & @fluxprotocol could benefit from $RAI. https://twitter.com/hasufl/status/1261666060354441218
7/ Who is Reflexer competing against?
Ideally, $RAI operates within its own niche as stable collateral for protocols like Maker.
Although, Maker has been thinking about implementing a similar target rate feedback mechanism: https://forum.makerdao.com/t/the-target-rate-feedback-mechanism-an-introduction/2319
Ideally, $RAI operates within its own niche as stable collateral for protocols like Maker.
Although, Maker has been thinking about implementing a similar target rate feedback mechanism: https://forum.makerdao.com/t/the-target-rate-feedback-mechanism-an-introduction/2319
8/ How does Reflexer make money?
Similar to how MKR holders make money: interest paid on DAI.
Demand drivers for $RAI: trustless and stable collateral for synthetic asset protocols such as Maker, UMA, Synthetix, etc.
Disadvantage of $RAI: capital-inefficiency.
Similar to how MKR holders make money: interest paid on DAI.
Demand drivers for $RAI: trustless and stable collateral for synthetic asset protocols such as Maker, UMA, Synthetix, etc.
Disadvantage of $RAI: capital-inefficiency.
fin/ Who is behind $RAI?
@stefan__ionescu is the CEO of Reflexer Labs, the organization building $RAI.
To date, Reflexer has been funded by @VENTURE_DAO.
The team is raising their seed & are looking to recruit talent familiar with the MCD design. https://medium.com/@adamscochran/why-metacartel-ventures-is-investing-in-reflexer-labs-d5f5a43c92e0
@stefan__ionescu is the CEO of Reflexer Labs, the organization building $RAI.
To date, Reflexer has been funded by @VENTURE_DAO.
The team is raising their seed & are looking to recruit talent familiar with the MCD design. https://medium.com/@adamscochran/why-metacartel-ventures-is-investing-in-reflexer-labs-d5f5a43c92e0