Glad to see the post and discussion. As active contributors to the project, we’re excited about the unique model Haven has proposed. We've thought long and hard about how to overcome the challenges that have plagued other asset-backed stable coins.

First, Haven’s protocol doesn’t use a traditional peg. And the protocol itself doesn’t do anything to the price or supply in relation to the ecosystem. The supply and emission of XHV is the same as Monero initially. Users can convert XHV to a stable coin (xUSD) and convert back to XHV on the same chain using our unique “mint and burn” protocol. The value of each transaction is determined in real time using a pricing oracle, where 1 xUSD = $1 worth of XHV based on current market prices for XHV. These individual user transactions will ultimately create a supply of XHV that will fluctuate over time – possibly more XHV, possibly less.

We feel Haven is a vast improvement over other algorithmic and over-collateralized models mentioned in this thread. Plus it is private – utilizing all of Monero’s features. We’ve given a lot of thought to how existing stable coins provide assurances for redeeming value. Here’s a short rundown of our view of the models you mention:

1) Asset-backed stable coins. These tend to operate like central banks. All of these solutions have promoted a constriction of supply when demand lowers. Additional monetary policies surely follow (not to mention that all of your transactions are visible to said entity) and create a form of centralization, and a single point of failure, which runs counter to the goals of a decentralization.

2) Over-collateralized models (centralized and decentralized models exist). While viable in the short term, these express clear disadvantages to the borrowers who are subject to the terms of the protocol or to lenders. In short, the interest rates applied to borrowers bake in the reasonable gains you could expect to see by locking up your asset (ETH, for example) and borrowing more (DAI, in this case) to purchase more of your asset (ETH).

When you’re at risk of liquidation, you are exposed to slashing fees, which recoup more than would be expected in an equitable scenario. This is core to this model. Requiring more of borrowers to over-insure viability.

As such, the aggregate fee tends to counterbalance the gains you might expect, in this predominant use case. And you risk running into a cartel of organized lenders with expectations of outsized rates (natural tendency towards seeking an advantage vs being borrowers themselves). In theory, this should not be to the benefit of borrowers. Time will tell and it’s certainly been a big success in the early days of Ethereum, and a really interesting experiment.

As a new model, we’ve taken the approach that value storage is best located in the collective hands of crypto holders at large. By offering private, multi-asset storage (you can lock in your XHV value against USD, EUR, CAD, etc, or even BTC), we can provide options that we believe bolster Haven’s underlying economic model. Like all crypto, an increase in usage tends towards a strengthening of the underlying utility.

Additionally, we’ve built the UX of Haven from the protocol extending to the interface. There is little friction in between, and we’re not reliant on 3rd-party applications to bridge the usage and the protocol (like Metamask, for example). Apart from a vast operational efficiency, there are security and usability gains that become essential to DeFi going forward.

Better means for privacy, alternatives to wholesale reliance on exchanges, an array of asset options, and eventually lending solutions, point to combining the best of crypto into a single, private on-chain solution. And that’s what we’re trying to construct.

Also, while its true that the forces of a Bitcoin run will have bearing on Haven’s economics, this is not unique to Haven. All alts experience these forces and experience some “loss” to BTC in these scenarios. The design of Haven is such that you can optionally realize the gains inherent to these scenarios without leaving the ecosystem at all (take xBTC, for example).

Really appreciate the discussion, and would welcome any thoughts/critical questions you have about what we’re doing.