Topic: A new stablecoin algorithm (Read 43 times)
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Introduction
In the blockchain, stablecoins occupy a large market.
As the leader of stablecoins, USDT's market value ranks third in the blockchain.
Because of its stable price, it is easier to apply to the payment field.
Its status is similar to legal currency and will have an unlimited future.
But USDT is centralized and relies on real institutions.
We will create a new algorithmic stablecoin.
Warning: This is only an experimental project. It is a completely new algorithm, theoretically feasible.
Types of stable coins
Legal currency mortgage type
By collateralizing assets such as legal currency, the corresponding tokens are minted on the blockchain.
Advantages: simple and efficient
Disadvantages: Centralized, easily affected by policies such as supervision, and the collateral is not transparent enough and relies on real institutions.
Representative: USTD, USDC, etc.
Digital asset mortgage type
Through over-collateralization of digital assets, stable coins are minted on the blockchain.
Advantages: Decentralization, over-collateralization, stable and credible value.
Disadvantages: The mortgage ratio is too high; the types of collaterals are limited, resulting in a limited total; when the price of digital assets fluctuates greatly, it is easy to cause a large amount of liquidation and liquidity drying up.
Representative: DAI
Algorithm type without mortgage
The issuance of stablecoins is minted by algorithms without collateral and is transparent and reliable.
Advantages: Decentralization, no collateral required.
Disadvantages: Most algorithms are driven by current or future benefits. When the benefits are insufficient, they will fall into a death spiral.
Representative: ESD, BAC, AMPL
Neither ESD nor BAC can avoid the death spiral.
They are driven by current or future interests, and the total amount is unlimited.
When the price is lower than the anchor price, they hope to increase the price to the anchor price through additional issuance.
If there are too many additional issuances, the future price will definitely be lower; if there are few additional issuances, the benefits are too small to achieve the goal.
The result is that after the price drops, it cannot rise back.
Although AMPL can avoid the death spiral, users’ assets are dynamic.
the goal
Realize a new algorithm that can dynamically mint stable coins and make their prices stable, which can be used for payment.
Architecture
Two currencies
Flexible Coins
It is similar to AMPL. The total amount of coins is dynamically scaled through rebase.
It is anchored at 1$, and its price is adjusted through rebase every day.
If the coin price is higher than 1$, increase the total amount (everyone’s account balance increases, and everyone makes money).
If the coin price is lower than 1$, reduce the total amount (all the account balances are reduced, and everyone owes money).
It stabilizes coin prices through rebase. AMPL has confirmed its feasibility.
Fixed Coins
It is an ordinary ERC20 coin, and the default price is anchored at 1$.
It is exchanged from flexible coin.
When the price of flexible coin is higher than 1$, it can be exchanged for fixed coin 1:1.
When the price of flexible coin is less than 1$, it can be converted into fixed coin on a pro rata basis.
Fixed coin can be exchanged for flexible coin 1:1 at any time (a small fee will be charged).
Since it can be exchanged for flexible coin at any time, its price will not differ much from the flexible coin.
Coin Minting
Flexible Coin
1. The mortgaged eth will be distributed at 1:1000; the mortgaged eth will be refunded 99% after maturity.
1. Mortgage time: 1 month
2. Asset retrieval time: 1 month later
3. The time the administrator can operate assets: 2 months
2. Its initial total quantity is determined by the mortgage quantity.
3. After the mortgage time has passed, mortgages are refused.
4. Mining rewards
1. Provide liquidity. When flexible coin rebases, mining rewards will be automatically added to the liquidity pool.
2. The number of mining rewards is fixed every year, equal to half of the initial total.
3. 80% is allocated to the liquidity pool of flexible coins, and 20% is allocated to the liquidity pool of fixed coins.
4. The total after 10 years will be 6 times the initial total.
5. Mining rewards are long-term
1. If everyone joins the liquidity pool, everyone's value remains unchanged.
2. If someone does not join the flow pool, his assets will slowly be diluted.
3. When the demand increases, the price of the currency will rise, and everyone will make money.
Fixed coin
1. At the beginning, the number of coins is 0.
2. Increase in quantity: It can be converted through flexible currency.
3. Reduced quantity: Fixed currency can be exchanged for flexible currency 1:1 at any time.
4. 20% of the mining rewards will be added into the liquidity pool of fixed coins.
In the blockchain, stablecoins occupy a large market.
As the leader of stablecoins, USDT's market value ranks third in the blockchain.
Because of its stable price, it is easier to apply to the payment field.
Its status is similar to legal currency and will have an unlimited future.
But USDT is centralized and relies on real institutions.
We will create a new algorithmic stablecoin.
Warning: This is only an experimental project. It is a completely new algorithm, theoretically feasible.
Types of stable coins
Legal currency mortgage type
By collateralizing assets such as legal currency, the corresponding tokens are minted on the blockchain.
Advantages: simple and efficient
Disadvantages: Centralized, easily affected by policies such as supervision, and the collateral is not transparent enough and relies on real institutions.
Representative: USTD, USDC, etc.
Digital asset mortgage type
Through over-collateralization of digital assets, stable coins are minted on the blockchain.
Advantages: Decentralization, over-collateralization, stable and credible value.
Disadvantages: The mortgage ratio is too high; the types of collaterals are limited, resulting in a limited total; when the price of digital assets fluctuates greatly, it is easy to cause a large amount of liquidation and liquidity drying up.
Representative: DAI
Algorithm type without mortgage
The issuance of stablecoins is minted by algorithms without collateral and is transparent and reliable.
Advantages: Decentralization, no collateral required.
Disadvantages: Most algorithms are driven by current or future benefits. When the benefits are insufficient, they will fall into a death spiral.
Representative: ESD, BAC, AMPL
Neither ESD nor BAC can avoid the death spiral.
They are driven by current or future interests, and the total amount is unlimited.
When the price is lower than the anchor price, they hope to increase the price to the anchor price through additional issuance.
If there are too many additional issuances, the future price will definitely be lower; if there are few additional issuances, the benefits are too small to achieve the goal.
The result is that after the price drops, it cannot rise back.
Although AMPL can avoid the death spiral, users’ assets are dynamic.
the goal
Realize a new algorithm that can dynamically mint stable coins and make their prices stable, which can be used for payment.
Architecture
Two currencies
Flexible Coins
It is similar to AMPL. The total amount of coins is dynamically scaled through rebase.
It is anchored at 1$, and its price is adjusted through rebase every day.
If the coin price is higher than 1$, increase the total amount (everyone’s account balance increases, and everyone makes money).
If the coin price is lower than 1$, reduce the total amount (all the account balances are reduced, and everyone owes money).
It stabilizes coin prices through rebase. AMPL has confirmed its feasibility.
Fixed Coins
It is an ordinary ERC20 coin, and the default price is anchored at 1$.
It is exchanged from flexible coin.
When the price of flexible coin is higher than 1$, it can be exchanged for fixed coin 1:1.
When the price of flexible coin is less than 1$, it can be converted into fixed coin on a pro rata basis.
Fixed coin can be exchanged for flexible coin 1:1 at any time (a small fee will be charged).
Since it can be exchanged for flexible coin at any time, its price will not differ much from the flexible coin.
Coin Minting
Flexible Coin
1. The mortgaged eth will be distributed at 1:1000; the mortgaged eth will be refunded 99% after maturity.
1. Mortgage time: 1 month
2. Asset retrieval time: 1 month later
3. The time the administrator can operate assets: 2 months
2. Its initial total quantity is determined by the mortgage quantity.
3. After the mortgage time has passed, mortgages are refused.
4. Mining rewards
1. Provide liquidity. When flexible coin rebases, mining rewards will be automatically added to the liquidity pool.
2. The number of mining rewards is fixed every year, equal to half of the initial total.
3. 80% is allocated to the liquidity pool of flexible coins, and 20% is allocated to the liquidity pool of fixed coins.
4. The total after 10 years will be 6 times the initial total.
5. Mining rewards are long-term
1. If everyone joins the liquidity pool, everyone's value remains unchanged.
2. If someone does not join the flow pool, his assets will slowly be diluted.
3. When the demand increases, the price of the currency will rise, and everyone will make money.
Fixed coin
1. At the beginning, the number of coins is 0.
2. Increase in quantity: It can be converted through flexible currency.
3. Reduced quantity: Fixed currency can be exchanged for flexible currency 1:1 at any time.
4. 20% of the mining rewards will be added into the liquidity pool of fixed coins.
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