As long as huge price fluctuations plague the ecosystem, cryptocurrency could never be globally adopted as a currency for everyday real life transactions.
Imagine if investing in cryptocurrency could guarantee steady returns, offered minimal risk of losing your initial investment, and helped make history by supporting a technology that you believed could make a difference in the world. And for those who enjoy riding the highs and lows of the cryptocurrency market, you could still participate in high-risk, high-reward endeavours while your initial investment was safe.
The Collateralized Debt Position (CDP) is a financial cryptocurrency concept that has been in development since 2014 by the MakerDAO project, which offers a possible solution to the high volatility that cryptocurrency faces today through the stablecoin known as Dai. A stablecoin is a cryptocurrency that is pegged to another stable asset. Pegging is the practice of fixing the exchange rate of one currency to the value of another currency. In this case, the Dai stablecoin is pegged to the US dollar. Having a stablecoin opens up many new financial possibilities for this burgeoning sector that were not possible before due to volatility. Not only does Dai offer stabilization, but is also offers transparency and decentralization, since it is built on top of the Ethereum network.
rDai enables you to automatically allocate your accrued interest to a recipient of your choice. The concept was originally created for the purpose of charitable giving.
Here's a few numbers, inspired by rTrees 🌲 🌲 🌲
1) a ten year time period,
2) a 7% APR compounding every block (15 seconds) and
3) a 10 trees per dollar/DAI rate.
Maybe optimistic but let's just see what happens...
"We'd need to generate $100 billion in interest to plant a trillion trees. How much principal would generate that much in ten years? The answer is...
$49.7 billion dollars. That's not nothing, but the world's billionaires in 2019 were worth $7.8 trillion. If they were to move 0.64% of their wealth to a trees generating interest fund for ten years, we could get there. And then they could get their money back!
Of course this isn't that simple and the assumptions could change things but not that radically. At 5% interest, it takes $60.7 billion (0.78% of the billionaires wealth) to hit the mark in 10 years. At 3% interest, it's $74.1 B / 0.95% wealth.
So let's just round up and say that if we could convince the world's billionaires to move 1% of their wealth to a #OneTrillionTrees DeFi interest-generating fund for 10 years, we can likely hit the mark."
While planting a trillion trees would be a dream come true, if we are honest, our ambition, and the reason why we partnered with OST, was to plant a million trees with the launch of our new app. The problem was that we needed to kickstart these wallets with a warm welcome of $10, let people turn likes into tokens, and enable these to be swapped into a fund that plants trees with #onetreeplanted. If we could leverage our community of 70K people we needed 700K and 300K in licensing fees to pay for the OST sdk software, hoping people would actually buy some extra tokens we envisioned that we could plant 1 million trees during the first few years of the launch of LTL Maps. The example of rDAI clearly shows that while the intention was great, there are better mechanisms today to achieve that goal.
We'd need to generate $1 million in interest to plant a million trees. Consider:
1) a ten year time period,
2) a 5% APR compounding every block (15 seconds) and
3) a 1 trees per dollar/DAI rate.
How much money do we need? And what does it take to code this type of smart contract?