Reflexer Finance Crowdsources Ideas for RAI V2, Buterin Suggests Non-USD Backing

Reflexer Finance, the team behind RAI, the first non-pegged stable asset backed solely by Ethereum (ETH), recently solicited suggestions from the community on desired changes for a second version of RAI.

The inquiry piqued the interest of Ethereum’s founder, Vitalik Buterin, who offered his insights. Buterin suggested exploring non-USD-connected indices to enhance RAI V2’s stability and neutrality. He outlined four key criteria for a good index: easily measurable, not too manipulable, credibly neutral, and reasonably stable.

Explore non-USD-connected indices.

A good index should be (i) easily measurable, (ii) not too manipulable, (iii) credibly neutral, (iv) reasonably stable.

Random ideas:

* World GDP
* Weighted basket of world currencies
* DAO manages a CPI-like basket

— vitalik.eth (@VitalikButerin) July 26, 2024

Essentially, Buterin proposed diversifying away from the U.S. dollar to provide greater stability. He also offered three potential index ideas:

• World GDP: An index tied to global economic output, providing a broad measure of economic activity.

• Weighted Basket of World Currencies: A diversified index comprising a range of currencies. This approach would balance the influence of multiple economies, reducing exposure to the volatility of any single currency.

• DAO-Managed CPI-like Basket: A decentralized autonomous organization (DAO) overseeing a consumer price index (CPI)-style basket of goods and services, ensuring a stable and neutral measure of value.

The Ethereum founder’s suggestions resonated with the crypto community, garnering widespread approval. Rafa Simon, manager of Dojo Chimpers, praised Buterin’s insights and suggested that exploring a basket of commodity indices could further enhance stability.

Great insights, Vitalik! What do you think about exploring a basket of commodity indices? It could offer another layer of stability

— RafaSimon (@rafalors) July 26, 2024

Another community member echoed the same sentiment, noting that a Consumer Price Index (CPI) would be a valuable addition, illustrating the relationship between crypto prices and the real-world economy.

Other community members responded to Reflexer Finance’s original question with alternative ideas. One suggestion involved utilizing liquid staking collateral to address bootstrapping and capital inefficiency issues, with the resulting yield directed towards incentives or reinforcing the peg.

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