A Russian Ruble Oracle

Over the past 2 weeks one had to be completely disconnected from the outside world to not know what’s happening in Ukraine and how the world came together to sanction the Russian Federation, a country led by Vladimir Putin.

2022 started with fear of inflation and central banks announcing and raising the interest rates. We’ve witnessed a steady price increase of almost everything. At the beginning of the year Russia was already fighting inflation with a 9.5% central bank interest rate while Germany had a negative interest rate of -0.88% and USA had 0.25%. On Thursday the 24th of February 2022, the day when Russia continued it’s invasion of Ukraine (after Crimea in 2014), many countries started sanctioning different parts of the Russian economy resulting in a 20% loss for Russian ruble. The Russian central bank tried to defend their currency with several hundred billions of Euros and US Dollars and as the news spread, customers of Russian banks in Europe started a bank-run which resulted in some of them being sold, which was the case of Sberbank Croatia. As war continued and trans-Atlantic alliances grew stronger, most Russian banks were locked out of SWIFT — the underlying “API” which we know as “wire transfers”, rendering Russian ruble 30% less in value on top of the earlier 20% loss. Russian government imposed limits on foreign currency withdrawals, banks made these limits even stricter generating sell pressure of crypto assets.

For a crypto trader calculating his trades in Russian rubles that’s a big issue — as every Russian citizen experienced grocery stores adjusting their prices daily and in many cases several times per day. What sold for 100 rubles in the morning, by lunchtime it was selling for 120 rubles.

The only (fairly) liquid markets to sell cryptocurrencies are BTC and ETH through peer-to-peer and Binance. The latter will offer Advcash and Payeer to transfer Russian rubles to bank accounts but with limited liquidity. This will also come with a 2% fee minimum.

As you can see from the peer to peer chart, Bitcoin traded for more than 6 million rubles.

Other than the general uptrend, the price spikes do not relate. While peer to peer trading went past 6.2 million rubles for 1 BTC, Binance traders maxed out at 5.25 million rubles for 1 BTC. As more sanctions are put in place and ruble looses value, it will be much more difficult to provide fiat RUB liquidity.

So, for Russian crypto traders which oracle do they trust? With oracles used on major dApps right now, traders can only hope that the pricing provider will be up to par with dynamic exchange rates, ruble liquidity, on-ramp and off-ramp pricing, all while the provider is not utllizing the obvious arbitrage opportunities.

ORAO can provide a customized oracle that takes all of these aspects into account. The BTC/RUB rate, the USD/RUB rate, the liquidity availability for the on-ramp and the off-ramp. We’ve talked about customized oracles before and dug a bit deeper through the pricing issue narrative.

P.S. fun fact:
With the current downtrend of Russian ruble, it will be cheaper to use it as toilet paper than actual toilet paper in several western countries.

From ruble to rubble…

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