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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Immense respect to Alameda team, FTX team and Solana. I respectfully disagree w your POV. Algo stables conceptually r similar to current monetary systems, & how they started, replacing central fiscal guarantees, w “liquidity providers” / crypto bankers ie yield seeking farmers.
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so to be clear I think that currencies not backed by USD are fine -- in some senses that's what BTC is, and EUR!
What they're *not* is "stablecoins", and IMO they shouldn't try to be.
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That’s where I disagree - Why are they not stablecoins? The definition of a stablecoin is simply any token that attempts to peg, with stability, to another reference asset. Algo stables attempt to do so in similar fashion to many others irl stables.
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Btw, I’m ok to agree to disagree as well, just very into this space now and really supportive of one of the projects which I believe has true potential to achieve its vision.
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It's *really* hard to be as tied to $1 as if you're backed with USD. Almost all other methods fall down in extreme scenarios.
so they might still be cool tokens, and might be good payment coins, but are unlikely to be stablecoin store of value coins.
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Understood. Premise of diff in opinion lies in expectation of future outcome. I am v optimistic abt the algo used as it almost 1:1 mimics monetary policies. Will need to run out for some time before the process comes full circle. Will see if algo becomes faith, ie true stable!
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oh yeah totally!
I just think it fails at the specific goal of being safe w.r.t. USD, or pegging to USD.