This post looks to kick off a conversation between the RAI and Tornado Cash communities. Myself and the Fire Eyes squad as well as the Reflexer Labs team believe that both projects are very much ideologically aligned and are excited to hear feedback and thoughts from everyone here on the proposal below!
Reflexer Labs has designed a new stable asset called RAI, which is a self-stabilizing, asset-backed credit facility. This proposal aims to introduce RAI to the Tornado community and begin discussion around the potential addition of RAI as a supported asset on Tornado Cash.
After its launch in February, over $100m worth of RAI has been minted and more than $300M worth of ETH has been deposited into the protocol. RAI has managed to stabilize using its on-chain PID controller and is now undergoing a governance minimization process with the intention to harden the protocol.
_ (Fire Eyes DAO) is a collective of Web3 natives navigating token economic and governance systems across the DeFi ecosystem. We’re working alongside the Reflexer Labs team to communicate and coordinate this discussion/integration.
RAI is taking a new approach at building a trust-minimized, stable asset solely backed by ETH.
Most of today’s stable assets suffer from a level of custodial or centralization risk. The primary example of this is with fiat stablecoins like USDC and USDT where centralized custodians are entirely responsible for holding onto user deposits in their own reserve.
While decentralized alternatives mitigate these risks significantly, alternatives use centralized collteral within their system and/or heavily rely on tokenholder governance (humans!) to maintain the health of the system.
RAI attempts to avoid these pitfalls by moving as much control of the protocol as possible to on-chain, automated algorithms. Backed purely by ETH, RAI is unable to be ‘seized’, switched off or otherwise taken down by any government or regulator. In a similar vein, long-term RAI will have minimal tokenholder governance over crucial system parameters like the redemption rate thanks to the on-chain PID controller.
Benefits to Tornado.Cash
- Ability to transact in a non-sovereign stable asset via tornado.cash in a more censorship resistant and trustless manner.
- Potential for incentivized RAI deposits into Tornado.Cash via FLX ‘ungovernance token’.
- Hardening and increased utility of the Tornado.Cash product due to there being more trustless assets/liquidity available to mix.
- Growth in community and market for Tornado Cash!
- We propose adding RAI to Tornado Cash, using 42,000 RAI AND 420,000 RAI as the denominations.
We believe that RAI is an ideal next step for the Tornado Cash community, given it’s ideological and architectural alignment. Adding RAI pools would give users more flexibility and confidence in depositing into Tornado Cash, given that RAI is resistant to the primary form of attack that current DAI pools could be targeted by.
What do people think? This post was written to spark a conversation and see whether the Tornado Cash community believes that there is value to be created through integrating RAI! Please share your opinion, ideas, concerns and anything else relevant