My first question for any stablecoin project is: if everyone starts selling your coin, who can you count on to buy?
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Like, if sellers drive GLD's price below gold's, redeemers will arb the discrepancy: buy shares, redeem for gold, sell it at a profit.
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To me, stablecoin = crypto-based "USD ETF": economically equiv to USD, just easier to trade. Like ETF, w/o a redeem mechanism it's suspect.
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Simplest solution is Tether: sit on pile of USD, let people redeem for coin. Works great, except totally centralized & thus vulnerable...
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Decentralizing this is a cool (old) idea, I hope it pans out! But, stablecoins - please address the "Who buys on drops" question head on.
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NB: "What if everyone starts buying & its price soars" gets way too much attention. Deflation is easy to stop (print more), inflation hard.
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Replying to @JaEsf
Keep it simple. See https://www.trueusd.com . A token that is redeemable for USD, with proper auditing.
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Replying to @antiprosynth
That's the Tether model (like, with auditing). Not against it per se, but trustless/single-point-of-failure-free it ain't.
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Fiat currencies are noncollateralized stablecoins with an inflationary bias
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