🧵 A deep dive into solving @ethereum's fund management challenges and why @protocol_fx's $fxUSD might be the solution we need...
Let's start with the core problem:
When @ethereum needs to convert ETH to stable coins for operational planning and fund allocation, something unfortunate happens. The market often interprets these moves as bearish signals, creating unnecessary selling pressure.
This creates a problematic snowball effect:
1. @ethereum sells ETH for stable coins
2. Short-term investors interpret it as a bearish signal
3. They start dumping their holdings
4. Market price is affected
5. ALL holders suffer—from your grandmother's savings to major institutions
But here's where it gets interesting...
Enter @protocol_fx's $fxUSD – a reserve-backed stable coin with a clever twist: every single $fxUSD is backed by $1 worth of @LidoFinance's stETH.
Here's how this solution could work for @ethereum:
Instead of selling ETH directly into the market, the foundation could:
1. Mint/swap their ETH for $fxUSD through f(x) Protocol or @cowswap
2. Execute the trade with zero slippage
3. Farm fxUSD using f(x) stability pools
4. Easily swap fxUSD to other assets through fxUSD’s AMM liquidity
The best part? These ETH would never hit the open market. They’re stored as $stETH in @protocol_fx's reserve, adding to ETH staking power.
Now, here's where it gets even more interesting—let's talk about risk profiles:
Current method:
❌ Sell ETH directly
❌ Everyone's holdings get affected
❌ Market sentiment takes a hit
Proposed solution:
✅ Mint fxUSD instead
✅ High-risk-tolerance holders gain access to leverage with zero funding cost and non liquidation risks
This creates a beautiful alignment of interests:
@ethereum secures needed stable funding for operations
* Market stability is preserved
* Advanced traders gain new opportunities
* Long-term holders remain protected
And the cherry on top? The entire process occurs without disrupting broader ETH market dynamics.
This could be a game-changer for how large institutional ETH holders manage their treasury operations while maintaining market stability.
What do you think about this approach? Would love to hear thoughts from the community, especially @ethereum and @protocol_fx teams.
@VitalikButerin @sassal0x @jessepollak @liamihorne
#Ethereum #DeFi #CryptoInnovation #Devcon2024 #DevconBangkok
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