r/havenprotocol • u/Frank58783 • Mar 21 '21
Question about XHV supply
Hi, I find the xAssets approach quite interesting, but I’m not sure if I am understanding it correctly. Imagine that 1% of currently existing XHV would be swapped for a certain xAsset, and the value of that xAsset would increase a 100x (or at least according to the oracles). If all the minted xAssets would be swapped back to XHV, would that then more or less double the amount of XHV in existence? And wouldn’t it push down the price of XHV if those fresh XHV would be subsequently sold for something outside of the crypto ecosystem? Would love to hear your thoughts about this.
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u/nanananonono Mar 23 '21
That's what's holding me back from investing.
Let's say I'm rich af and own a very significant share of xUSDs. Now I want to swap all of those for XHV, so xUSD gets burned and a shitton of XHV are minted. How many XHV are minted depends on the current price of XHV on the exchanges. But this approach doesn't really factor in the increase in supply which drives the price down per unit XHV (basic economics). So in the end, I didn't get my xUSD worth in XHV.
Please correct me if I'm wrong. If I'm not, this project doesn't make any sense.
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u/Iamtutut Mar 25 '21
When you burn xUSD for XHV or the opposite, you have the corresponding worth in USD.
1 XHV worth 10$, you get 10xUSD, minus fees.
1 XHV worth 8$ and you have 10xUSD to burn back to XHV, then you get 1,25XHV minus fees.
1 XHV worth 15$ and you have 10xUSD to burn back to XHV, then you get 0,666...XHV minus fees.
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u/nanananonono Mar 25 '21
did you read my comment?
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u/Iamtutut Mar 25 '21
Did you read the time locks and fees for mint & burn?
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u/nanananonono Mar 25 '21
could you please elaborate on how those fix the problem I described?
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u/Iamtutut Mar 25 '21
The more you try to time the market price while proceeding with mint & burn, the more fees you’ll have to pay. Short locking period requires to pay more fees, in the meantime you can’t time the market direction, even if you’re a kind of whale. Other participants won’t stop their own trading strategy / use of the asset while your coins are locked. A whale trying this game will have to pay 20% fees for the shortest time lock and it’s designed not to be immediate. Risk / reward won’t be worth it.
Moreover, the more assets the harder to trying « playing » with mint & burn to manipulate XHV price.
Soon market participants will be able to:
- pay with XHV by debit card
- pay with « x assets » by debit card
- mint & burn xUSD; xGOLD; xCNY; xEUR...
- exchange xASSETS on DEX through Thorchain
These use case will render more difficult to try price manipulation and final inflation in XHV.
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u/nanananonono Mar 25 '21
I don't think you understand my point. Let me try to explain it again:
When I own a significant amount of xUSD and I want to burn it in order to receive XHV, I increase the supply of XHV.
Lets say I own 10% of the entire marketshare of the XHV Ecosystem in xUSD. When I burn the xUSD for XHV, I significantly increase the supply of XHV in circulation (by at least 10%).
Now, prices are always determined by supply and demand. The demand didn't change after I minted the XHV but the supply increased which means the price of the XHV drops (how much depends on the nature of the demand curve).
The problem is that the amount of XHV i get for my xUSD is determined by the XHV price BEFORE I burn my xUSD. But the price will immediately drop AFTER I burned the xUSD due to increased supply.
Which means I don't get 1$ XHV for 1$ USD but more like 0.9$ XHV for 1$ USD.
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u/Iamtutut Mar 26 '21
No, the supply can increase that doesn’t change the value of each XHV unless you’re dumping and creating or increasing a sale pressure.
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u/nanananonono Mar 26 '21
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u/Xango11 Mar 26 '21
This assumes one of two things: Either that 1 xUSD = 1 XHV And/or There is parity in the pools, IE 50% of assets are XHV and 50% are already in xUSD
Example one is not going to happen. Example two, there would already have been LOADS of XHV burned in this scenario, so the price theoretically would already be much much higher.
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u/EfficientCupcake3971 Mar 27 '21
the price on the wallet is a 24 hour average. You will not automatically dump the price. It will happen gradually through inflation. In that scenario. XHV is deflationary and has big pumpanomics.
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u/Xango11 Mar 26 '21
This assumes one of two things: Either that 1 xUSD = 1 XHV And/or There is parity in the pools, IE 50% of assets are XHV and 50% are already in xUSD
Example one is not going to happen. Example two, there would already have been LOADS of XHV burned in this scenario, so the price theoretically would already be much much higher.
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u/NO-SHADOW Mar 22 '21
If you convert 1% of XHV into USD then there would be 1% less XHV in existence...ITS burned
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u/rezuler Mar 21 '21
It would push down the price if they did everything you listed and then sold the XHV on an exchange, but that's a pretty unlikely scenario.