Let’s get HAI on Optimism!
Overview
- We have formed a team to ship HAI, a multi-collateral RAI fork on Optimism
- ReflexerDAO has been providing technical guidance and operational support
- 20% of the HAI governance tokens (KITE) will be used to buyback & burn FLX over time
- We brought on Defi Wonderland to lead the development effort (link to code repo)
- My company, SpankChain is the sole seed investor, covering the dev budget
- Our estimated testnet launch is June 9th, with mainnet launch estimated by the end of July
Background
One of my favorite criticisms to get about RAI sounds like this: “RAI is broken; the redemption rate is constantly negative because ETH is the only collateral”. The reason this is my favorite criticism is because it implies the critic actually understands how RAI works!
They typically continue: “if only you could add staked ETH as collateral, then maybe the rates wouldn’t be so negative…” which is also a fair criticism. With RAI using only ETH as collateral, the RAI minters are taking on an opportunity cost by borrowing RAI against their ETH when they could be earning a staking yield on their ETH instead. The persistent negative redemption rate reflects the equilibrium compensation that RAI minters demand to make up for their opportunity cost. If RAI could be minted against stETH, for example, then perhaps the minters would be willing to tolerate a small positive redemption rate. And if RAI could be minted against even more collateral types, then it’s even more likely that RAI could find minters willing to bear positive redemption rates to borrow against their collaterals…
Announcing 
HAI
In order to advance the cause of RAI, grow the ecosystem of open-source developers on this codebase, and increase mindshare for controlled peg stablecoins, we have decided to deploy a multi-collateral fork of RAI called HAI on Optimism.
HAI has the following characteristics, explained further below:
- collateral types will include ETH, RAI, LSDs like stETH/rETH, and assets on Optimism like OP and UNI, with room for expansion
- more expected long-term governance than RAI (e.g. to add/remove collateral)
- PI controller to set redemption rate, same as RAI
- initial price will be $1 USD instead of an arbitrary value like RAI’s $3.14
And given everything we have learned from RAI, it seems likely to me that equilibrium redemption rates for HAI will probably trend positive, so the price of HAI will get higher over time.
Collateral Types
The day 1 collateral types for HAI will be ETH and wstETH, which we expect to represent the largest markets on Optimism, and have plans to add OP shortly thereafter. Other collaterals will need to be voted in via governance. All collateral types will have independent, governance-set, debt ceilings.
Price feeds per collateral are dramatically cheaper on L2, so the major factor to consider for new collateral decisions is the availability of liquidity & willing liquidators.
Governance
The governance token for HAI will be called KITE. HAI will have KITE governance enabled on day 1. We are currently working with Tally to determine the best governance contracts to use (deciding between compound bravo & open zeppelin).
PI Controller
Like RAI, HAI will use a PI controller, and probably will use similar parameters. More info TBD.
Initial Price
HAI will start at $1. While it may confuse people to see a stablecoin drift away from $1, the mental math of calculating drift over time is much easier with a $1 starting price.
Incentive Alignment
SpankChain is also contributing The Money God Altar, which is an open source smart contract to facilitate incentive alignment between the HAI and RAI communities. 20% of the KITE supply will be deposited in a Sablier stream on Ethereum mainnet, with the Altar contract as the recipient. Every 30 days, anyone will be able to call a function to 1) withdraw the streamed KITE to the Altar contract and 2) max bid using KITE for FLX on CowSwap. Any purchased FLX will remain in the Altar permanently, burned in sacrifice to the Money God.
The Money God Always Wins
Token Allocation
- 20% - Team & Advisors (10+ folks)
- 20% - DAO Treasury
- 20% - FLX incentive alignment
- 40% - Community Incentives
Conclusion
RAI crawled so HAI could fly. We’ve known from the beginning of RAI that for RAI to truly succeed, it wouldn’t be by standing alone as the sole “controlled peg” stablecoin, it would be by inspiring the development of an ecosystem of open source stablecoins, and collectively educating the world to drive adoption. To grow RAI, it’s time to get HAI.
With HAI, we look forward to expanding the Money God League with HAI, bringing controlled peg stablecoins to L2, and exploring the dynamics of multi-collateral systems.
If you would like to get HAI with us, please join here!
#letsgethai #touchgrass
