| id | Title | Status | Author | Description | Discussions to | Created |
|---|---|---|---|---|---|---|
| TIP-204 | USDC as default collateral for Overtime v2 | Draft | Cvija (@scvija) | Switch sUSD to USDC as native collateral for V2 | https://discord.gg/thales | 2024-05-20 |
Switch to USDC as the default collateral for Overtime v2
This TIP proposes the switch the default collateral for trading on Overtime on the Optimism network from sUSD to USDC.
When Thales was originally started in 2021, it was spun out of the Binary Options module of Synthetix, and it was and undoubtedly still is a member of the Synthehtix ecosystem to this day.
When choosing which collateral / stablecoin to choose for Thales Markets, sUSD was a natural choice: sUSD was a liquid, uncensorable stablecoin, heavily overcollateralized and well known. When Optimism went live Synthetix was one of the first protocols to participate with their products, sUSD included. All this, and the contionuos support from Synthetix, was more than enough for Thales to choose sUSD for it's collateral for Optimism.
Almost a year later, in 2022, Thales released another product, Sports Markets, with its frontend called Overtime. Even thought it used a very similar architecture as Thales Markets, Overtime was a much more retail friendly product. Thales Market digital options are meant to be a simple and easy-to-use product itself, there definitely are more people familiar with how a sportsbook works.
Tha challenge for non-crypto users was of course how to get crypto and use a wallet, and this was handled is some manner with tutorials and onramps, but we have noticed even users that are familiar with crypto had some struggles. One of them was why they need to use sUSD, is it safe, is it an algoritmic stablecoin etc. The fact is, if you were not an Optimism native user or familiar with the Syntetix ecosystem, it is very much possible you don't really know what sUSD is.
To fix this, Overtime added multicollateral support using the sUSD pool, which allowed Overtime to support USDC, USDT and DAI, which regular crypto users were more familiar with. sUSD was not abbandoned however, the system was still using sUSD in the background. For example, if a user wanted to place a trade for 100 USDC, he could pick USDC as his preffered collateral, and in the background USDC would get swapped to 100 sUSD (or slightly less or more, depending on the peg) using Curve. Ultimatively, the trade would still be placed in sUSD, but without the user even noticing, with zero friction.
In the last couple of weeks, we have noticed that users have been complaining that they cannot place trades sometimes these different collaterals. It turned out to be related to sUSD being off-peg, trading for less a dolar. This is not uncommon for stablecoins, so a buffer has been added, of 1-2%. This worked for a while, but sUSD has been going as low as 96 cents recently, which even these buffers could not cover. This, the general reduced liquidity of sUSD, and the fact that Overtime on other networks already uses USDC as the main collateral, make this a logical next step.
This makes sense especially with the upcoming release of Overtime v2, with a completely new set of contracts. Overtime v2 will also have an offering of sports and markets that is much more broad, looking to attract many new retail users, so using a collateral that is better known can be useful to reduce the friction as much as possible.
Replace sUSD with USDC as the default collateral on Optimism for Overtime v2. It is important to know that there are 2 version of USDC on Optimism, USDCe (bridged USDC) and native USDC. Which of these will be the main one can depend on the liquidity of both of these on the given network.
The existing multicollateral buy-in will still be supported, but the new architecure will also support multiple collatera pools at the same time, meaning that we could have an straight ETH pool. This way if you buy-in for 1 ETH with a multiplier of two, you will get 2 ETH, not 2 ETH value in USDC. This allows also for creating a THALES pool for example, for users wanting to place trades using THALES.
https://github.com/thales-markets/contracts-v2
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