OK so my philosophy on "algorithmic stablecoins"
1) sometimes their market cap goes up, which is cool I guess
2) the whole notion of a "stablecoin" that isn't backed by something you're confident will retain most of its value makes no sense
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Maybe the wrong implementation now, but right directionally IMO and interested to see more. Thought experiment: the Fed replaced by an algorithm is probably a net positive. Most things are not great decentralized, but this is one of the few things that are. Results seem far away.
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Yeah could be super cool -- just don't think it's a stablecoin; it's instead a new currency with more decentralized monetary policy. It won't stay at $1 and that's ok!
Why would governments want to support such a thing? They would give up too much power imo
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If the algorithm replaces US monetary policy isn't it by default $1
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Hmm, but in a way the USD is also a stablecoin, loosely pegged to consumer prices.
Ergo, by that logic it shouldn't be impossible to do what the fed does but with a USD peg and decentralised?
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USD can peg to USD because it's USD
nothing else can hard peg to USD without using USD somewhere :P
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The following implemented on a high-throughput Blockchain would begin to over time break its earlier peg to the USD: unitychain.github.io/token-economic
We used past #btc data in the simulation to see how quickly the feedback loops would self correct in the face of large volatility
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We also think a pure algorithmic stable coin should be backed by something.. like a network
Here’s a hint on how this works:
Tx fee is constant and pegged to the purchasing power today of, for example, the fraction of a slice of bread (proxy to mean pegged to CPI-like data)
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