SIP XX - Add Brazilian Real Stablecoin BRZ as Collateral

SIP XX - Add Brazilian Real Stablecoin BRZ as Collateral

  • Background on Transfero
  • The Proposal
  • The BRZ Token
  • The Positioning of Sovryn
  • Long Term Vision

Background on Transfero

Transfero Swiss is an international Company born in Brazil and headquartered in Zug, Switzerland, in the heart of the Crypto Valley. Our primary mission is to facilitate and foster the adoption of digital assets, starting with BRZ, a stablecoin pegged to and backed by the Brazilian Real.

Transfero has plans to tokenize Fiat currencies for all latin american countries, first with the BRZ in Brazil, and recently soft launching the ARZ in Argentina, we have big plans to develop latin american stablecoin to stablecoin swaps in all of Defi.

Transfero offers a plethora of financial services to its clients, having almost 500 Million in AUM across client’s managed portfolios, client loans, staking, BRZ backing instruments, etc. we want to position ourselves as the top fintech for cryptocurrencies in latin america.

We believe in the disruption of the financial markets and thus serve users who wish to gain access to this new asset class, providing an exclusive experience for Sovryn individuals and institutions.

The Proposal

We propose the inclusion of BRZ as an asset that can be used as collateral within the Sovryn trading platform. This would allow users to leverage BRZ against RBTC and other assets listed on https://live.sovryn.app, while also allowing lenders to earn interest on their BRZ lent out.

  • Transfero Swiss is willing to bootstrap $700k worth of xUSD and BRZ in the AMM liquidity pool on Sovryn, with $300k worth of BRZ in the lending pool so users can begin borrowing and leverage trading. We and our top clients will provide more liquidity into these pools as our relationship with the Sovryn Bitocracy develops.

  • What we also request is 45,000 amount of $SOV tokens to be distributed to early BRZ liquidity providers, excluding Transfero, for the first two months of liquidity provision to generate momentum for the pools.

The BRZ Token

The BRZ is the first Brazilian stablecoin in circulation. This will allow Brazilians to directly increase investments in decentralized cryptoasset exchanges, lend and trade a stablecoin pegged to the Real (BRL) on a global scale. Making it possible to send and receive tokens immediately and securely, at a small cost compared to any other alternative. Since inception the BRZ has become the world’s largest non-USD pegged stablecoin, illustrating the sort of demand for such an instrument in Brazil

We have developed our own cross chain bridging technology, allowing our stablecoins to flourish in defi and we would love the first Defi allocation of our token to be with the Sovryn community

In practice, we can say that the BRZ is a payment system based on an independent token and powered by well-established blockchains, allowing people to keep digital assets backed by government-issued fiat currency, linking these digital tokens to cash equivalent reserves.

The Positioning of Sovryn

Sovryn is uniquely leading in a direction that no other DeFi project is doing - Sovryn is expanding DeFi to real-world jurisdictions and building its smart contract platform on top of the biggest crypto gateway in the world: Bitcoin.

Sovryn has begun collaboration with a state-owned bank in El Salvador - which nationally recognizes Bitcoin as legal tender.

It is highly likely that Brazil will soon follow. This is perfect timing to push Sovryn to become the largest DEX with BRZ liquidity to precede such a potential milestone.

BRZ currently trades at around $15M in daily volume on exchanges such as FTX, Crypto.com, Bittrex, and CoinBene, with more listings planned in the future. We would like to make Sovryn the focus for users who wish to trade BRZ on a permissionless exchange.

Long Term Vision

We do not intend to stop with BRZ. We are also in the process of building our second and a third stablecoin backed by other South American fiat currencies…

Sovryn could potentially become the premier FX DEX, on a Bitcoin-POW secure chain. We could tap into new markets and open doors to other jurisdictions and users who otherwise would not have access to this form of permissionless trading.

We hope to become a valuable liquidity partner and pave the way with the Sovryn trader community.

19 Likes

I think it would be absolutely great to be able to offer BRZ through Sovryn!

Some questions:

  • I would personally like some information on how the BRZ tokens are backed, to better estimate any risk that comes into the system. Maybe just a link to some doc that explains the backing?

  • The proposal mentions that $700k worth of xUSD and BRZ will be used to bootstrap. It’s not entirely clear to me why this includes xUSD. Is the idea to open up a xUSD-BRZ AMM pool? Currently, the pools are against rBTC and I think it would be good to stick to this. If this wasn’t the plan originally, would a BRZ-rBTC pool work as well?

  • I’m hesitant about the request for 45,000 SOV tokens to be used as reward to incentivize new liquidity. We haven’t done this for other tokens such as FISH, RIF, MoC, and, looking ahead, we can’t constantly drop more SOV into the market to bootstrap every new token listing. I understand the need to incentive users though. I’m not sure how hard this is at the protocol level, but it would be great if Transfero could have its own address from which to reward liquidity providers, in any token it desires and for as long as it desires, from its own funds. Would be great if a SOV dev could comment on the feasibility of this. Assuming this might require considerable dev work though, I wonder how Transfero would consider the proposal without the 45k SOV for rewards.

2 Likes

Hello Martin,

To your questions,

  1. BRZ is overly backed by Brazilian government bonds in a public fund within BTG Pactual (one of the countries largest investment banks).

  2. This conversation was had with devs, we will introduce further stablecoins to create a decentralized multinational SC market in sovryn.

  3. We will waiver the Farming. This is solely for our users, it is BRZ’s first outing into Defi so it is extremely important to bring in interest, and we believe that our mission aligns very well with Sovryn’s, for a truly free world. Lets build a Stablecoin Foreign Exchange and grow svoryn, together.

6 Likes

I think this could open up a whole new niche for Sovryn to fulfill, being the premier permissionless FX DEX.

7 Likes

Looking forward to vote in favour of this SIP.
A global decentralized Stablecoin market based on Sovryn / secured by bitcoin sounds pretty exciting!

4 Likes

Thanks for the answers!

If anyone else is interested in reading a bit more about the BRZ token (inlcuding the backing mentioned, the chains it’s built on, etc.): https://www.brztoken.io/. Looks great.

About the 45k SOV loot drop; it’s nice that it will only go to users providing further liquidity. I was hesitant about it, but I see the importance of bringing in interest and to make the pool of a healthy size quickly.

I’m convinced and very excited about this. Thanks again for your answers @Mace_Transfero.

1 Like

Happy to see some unique SIP’s come through. I really don’t have a stance on this either way and would have no reason to vote against it. However, I also struggle to see the immediate big benefit:

  • Can you give specifics on how you plan to push users and adoption to Sovryn? Once the token is added to the AMM, then what? Is there any way to quantify how this can help Sovryn grow it’s userbase or volume.

  • It’s a cool idea but do we really additional stablecoins outside of USD? Is $15M very much volume. I think Tether alone does like $120B. Obviously apples to oranges but I am just trying to get an idea of how much people will actually use this BRZ if we add it?

  • How do users acquire BRZ. Is this via KYC?

Thanks!

I also thought about that. Gary Gensler recently published a document regarding the regulation of stablecoins and this document basically says that usd-pegged stablecoins may only be issued by authorized banks and that the regulation of these stablecoins would basically give them some kind of control over DeFi (if i interpreted that correctly). Everyone here knows that this is bullshit.

But i think a good signal would be some competitor to us-issued stablecoins that makes the regulator overthink this position in order to not loose influence on their currency.
US-pegged coin regulated? Let’s use BRZ. Also regulated? Let’s use Euro’s. Also regulated? Let’s use an african one. Regulate that Gary.
I think this could give Sovryn and DeFi more resilience.
That’s why i really welcome this SIP.

4 Likes

Good Morning dseroy,

To answer your questions:

  1. This will automatically call the attention of all the BRZ holders, large clients of transfero and all FTX clients from Brazil. But we will make a media effort to bring in even more using our channels and own media site; panoramacrypto.com. I also have received word of wealthy bitcoiners, currently in Brazil, who would rather use Defi. We are soon launching our BRZ bridge into Risk… So this could go far.

  2. That ignores most of the world’s population not being pegged to the dollar. To this spirit, we will soon follow with the launch of the ARZ and bring Argentina into the game.

  3. We only enforce KYC for sums over 10 thousand BRZ a month (roughly 1800 thousand dollars) on our own app, crypto.transfero.com, and our partners follow their own rules.

5 Likes

This idea I like. It contributes to the sovereignity.

6 Likes

Hi,

As a brazilian, I really would like to see BRZ on Sovryn. Would be great if the bridge (https://testnet.bridge.brztoken.io/) be integrated on Sovryn Portfolio so people could deposit and withdraw BRZ using different blockchains.

6 Likes

I am Brazilian and it will be great to enable Brazilians to enter the DEFI market.

7 Likes

Happy to support this proposal, I can also see Brazilians are happy with this SIP. Its a yes from me.

4 Likes

Great proposal, I see only upsides for Sovryn as soon as KYC is not mandatory or enforced to access the BRZ or any stable token. I can see this initiative and further stablecoins joining the platform go a long way within Sovryn. stables together with bitcoin make the backbone for DEFI, which is why MYNT and ZERO are amazing project. The more we expand the stablecoin offering and the onboarding options for local communities the higher the reach of Sovryn financial services! It’s a yes for me.

A few concerns about the points above:

  1. I think the liquidity pool should be a BRZ/rBTC pool paired with a BRZ/xUSD trading contract that relays all trades through routing to the BRZ/rBTC pool, just like it is done for SOV. Lets remember that Sovryn is a Bitcoin first platform, made to access Bitcoin based services and trading against bitcoin in the first place. While this will raise the chances of IL for traders it will also foster the ground for many more pairs between multiple stables without the need to open new LP for each pair. Few are aware that when you trade SOV/xUSD you are actually trading SOV/rBTC → rBTC/xUSD, I do not see why it should be done otherwise for BZR

  2. Asking the bitocracy to release 900k$ in SOV as incentives to attract new liquidity paired with 900k$ of liquidity provided from Transfero Swiss is an asymmetric deal, entirely to your advantage and doesn’t stand. Basically you would be borrowing us the liquidity while the treasury will be distributing SOV that will then flood the market and dilute the SOV price. I see the value for incentives and it has been done in the past, but when MoC and DoC where incentivising their pairs in the AMM they provided the bonuses. I think a similar approach should take place. This doesn’t mean that the Bitocracy should not consider participating int he incentives, but in this case this is not an ideal deal for Sovryn.

I would suggest a revision of the proposal as such:

  • Tenero Swiss should be bound to keep the provided liquidity in the AMM for a year
  • Tenero Swiss should provide monthly incentives in $SOV or $rBTC to attract further liquidity and whatever the offered amount would be, the bitocracy will consider doubling it with $SOV from the treasury. So if Tenero was to bring 20k $SOV over 3 months, the treasury would do the same.
5 Likes

My very same concerns, sorry for missing your comment before replying myself.

I strongly believe that, while the project is great and should be pursued, the AMM pool should have rBTC as a base pair (it won’t impair xUSD or other stables market, the only effect is a minimal raise of fees due to contract composability/routing), that the liquidity bootstrap is bound for a certain amount of time and possible that incentives are not unilateral, and most especially not done by moving large amounts of $SOV to people’s wallet. Incentives such as co-partecipation are perfectly doable, though

2 Likes

Very interesting SIP, full support here.

I love the idea.
The only thing I don’t like is you’re only focusing on Latin America’s. If you’re headquartered in Zug, it’s time to conquer Europe :slight_smile:

3 Likes

I agree too that the AMM pool should have rBTC as a base pair.

1 Like

All those suggesting the pair be with rBTC:

The base maths of AMMs is very simple, but it can get very complex the deeper you go into analyzing its effects. Out of these analyses the single most important effect is impermanent loss, putting it basically, if the price sways away from the point at which the liquidity was provided too much without a yield that is enough to counteract this, the liquidity provider has less money than by just holding.

1 Like