In the context of exploring the possibility to add new collateral assets to Vesta, we face a dilemma of whether to expose VST to centralized stablecoins. We have seen tons of “wen GLP” on our social media. If you were attentive on our Discord server, we recently launched a few series of community polls. The second one was about the next collateral asset that the community would love to see on our platform. The result was clear: community wants GLP from GMX to be our next collateral.
On the first end, we value our community a lot. Everyone in web 3.0 knows the phrase: “A good project without a community will probably fail, while a bad project with a strong community will probably be a success”. We are convinced that the success of Vesta is conditioned by its Vestals community and implement what they want is crucial. This vote shows evidence that GLP would attract more TVL and grow our Vesta utilization. Vesta would be the first protocol to allow the collateralization of GLP, and being the first-mover is often a competitive advantage.
On the other hand, GLP is mainly composed of centralized stablecoin: USDC and USDT. Collateralizing GLP would implicitly means that VST is also backed by USDC and USDT. The issue is quite evident: VST would lose its current edge of decentralization. Indeed, VST is for now backed by decentralized assets, which are ETH, BTC, gOHM, GMX and DPX.
This leads Vesta to a dilemma: Should VST be exposed to centralized stablecoins?
Note that GLP is not the only asset impacted by this dilemma, other assets that we can list immediately include tricrypto, Yearn tricrypto, USDT, USDC, etc. Once we go multi-chain, we will also run into this issue again.
From our point of view, VST growth is the most important task of the protocol at this stage. Higher amount of VST minted would facilitate higher revenue accrual to the protocol as well as higher volume for the stablecoin itself. As a debt issuance protocol, the focus should be on issuing as much debt as possible while making sure that the system stays solvent to maximize revenue.
In addition, GLP is notably asked a lot by our community members. We believe that this particular asset could be a huge step forward for us. It would also strengthen our relationship with GMX and its community. Listing GLP as a type of collateral also paves the way for other aforementioned assets such as Yearn tricrypto.
We recognize that this is not a light decision, and that is why we open this discussion to the community. All constructive opinions are welcome and the discussion between Vestals is encouraged as long as the rules of good conduct are respected.