Recently, it has been seen that the algorithmic stable currency has begun to revive along with the continuous inflation of AMPL, and it has become quite popular.
It is said that it has revived because it has existed before, and it has been popular before 2020.
In previous articles, I have introduced AMPL’s rebase mechanism, upward spiral and death spiral, and investment strategies (the link is at the end of the article). Now facing such a situation, it is necessary to propose relevant and different strategies again.
stable currency
stable currency
To search for related articles, there are relatively many articles by Pan Chao, head of MakerDAO China.
After reading the article, I feel that this is an excellent researcher, and the expression is very clear, but Pan Chao put forward a point of view when describing stablecoins: "Only mortgaged stablecoins have long-term value."
"Why do you say that? Because the currency issuer, whether it is a string of codes or DAO, is not linked to the identity and rights and interests in reality, so it cannot create unsecured credit currency. Then who will identify the ability to borrow and repay the loan? Who will liquidate assets and provide emergency relief when others default and go bankrupt?
Even if the algorithmic stable currency introduces some assets as collateral, as far as the issuance mechanism is concerned, there must be appropriate rules so that multiple parties in the transaction have stable expectations, and they must also be able to adapt to special circumstances. To achieve this, human judgment and off-chain governance are inevitable.
In addition, the introduction of data analysis into monetary policy has actually been widely adopted in the traditional banking system. Central banks and commercial banks in various countries collect feedback and forecast models through indicators to help choose the most appropriate tools in different monetary policies. Formulating the monetary policy of an economy is no less than driving a high-speed car in a complex terrain. Even if it is equipped with the most advanced automatic driving system, it still requires human participation from the police and security personnel when the machine is stupid. Blindly emphasizing some magical stable currency algorithm on the blockchain with incomplete infrastructure and lack of identity data is tantamount to training a self-driving car model on Excel, which is far from enough. "
Of course, I basically agree with the view that "only mortgaged stablecoins have long-term value". What I agree with is to mortgage assets to obtain currency. It is possible to issue currency based on national credit. The United States can also issue treasury bonds and print dollar banknotes. It is also possible for us to mortgage real estate, gold and other physical objects to lend money or issue currency with physical assets as collateral——Before the Bretton Woods system knelt down Well, the U.S. also uses treasury gold as a credit endorsement for the U.S. dollar, so the U.S. dollar used to be called the U.S. dollar.
According to the above logic, if ETH is mortgaged in exchange for DAI, can encrypted assets such as ETH really be benchmarked against gold, real estate, and national credit? It doesn't seem to be possible.
A digital currency whose value is difficult to estimate, is the stable currency issued by mortgaging this thing stable? Even if the various adjustments are the same, I can only say "it's okay".
Of course, I am not saying that DAI and elastic stablecoins are better than the other. In fact, DAI and algorithmic stablecoins are not very good as "currency". However, stablecoins backed by encrypted assets (such as DAI) are more in line with the traditional logic of issuing stablecoins. In terms of stability, DAI is much more "stable" than algorithmic stablecoins (AMPL, BAS, BAC, ESD, BASE, etc.). More logical and sustainable. After all, encrypted assets such as ETH are relatively strong-at present it seems.
secondary title
Is algorithmic stable currency a false proposition?
Algorithmic stablecoin or algorithmic elastic stablecoin, the logic behind it is that its own algorithm + target price + rebase (elastic supply) form a set of "self-healing" system, there is a lot of innovation here, of course, big innovation means big risk.
Is it a false proposition? Retail investors don't care about this, if it is really a stable currency, the transaction volume will not increase by leaps and bounds, and there will not be so many people buying this thing.
Buy you because you are unstable, use you because you are stable.
Will you invest in USDT, DAI, USDC, etc.? There is a high probability that the encrypted market will buy these stablecoins. In order to conveniently invest in Bitcoin, Ethereum or other encrypted asset targets, the elastic stablecoin itself cannot be stable at present. In the future? There is a high probability that it will not be stable in the future, unless... the market value of AMPL is very large, and there are enough people participating, and then it will fluctuate between the so-called 0.95-1.05 US dollars without deflation or inflation. This belongs to the "lifetime" series up. Don't have too much hope, everyone's hope is not to make it stable, but to make a profit.
Algorithm + target price + rebase, if a stable currency is really made in the future, I would like to hear it, because the currency system in the world has created a currency that does not require credit endorsement or asset mortgage, which is very interesting. So it cannot be regarded as a "false proposition". If the proof is left to time, this proposition can only be partially falsified logically. As long as the coin is still alive without kneeling or returning to zero, it is difficult to say that AMPL and other algorithmic elastic coins It is a false proposition, because it cannot be falsified for the time being.
Remark:
Remark:
On the morning of December 8, 2020, I checked uniswap. If you take a closer look, you can see the top 18 currencies with large trading volume, such as amplforth (AMPL), Base, basis share (bas), basis cash (bac), etc. Both are resilient stablecoins.
