Editor's Note: This article comes fromChatting with Xiaozha (ID: xiaonazha88), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chatting with Xiaozha (ID: xiaonazha88)
Chatting with Xiaozha (ID: xiaonazha88)
, reprinted by Odaily with authorization.
1. The stablecoin market is huge and profitable. It was controlled by institutions in the past. Rebase seems to have opened a hole. Everyone can go in and take a look;
2. Algorithmic stablecoins are topical because they are unstable, fluctuate greatly, have stories, and have room for hype. If they are stable, they may not be discussed much.
In the track of algorithmic stablecoins, the rise of ampl brought the topic of defi native stablecoins into everyone's field of vision. ampl opened the door to rebase tokens, and the market value of hundreds of millions of dollars opened up the imagination of rebase tokens. There are already many players Yes, as shown below.
Here, let’s talk about the ESD algorithm stable currency.
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1. ESD algorithm stable currency, what is it?
In the ESD project documentation, they describe themselves as a "decentralized self-stable dollar"
Robert Leshner, founder of Compound Finance, called it "a brand new algorithmic stable currency";
Empty Set Dollar, or ESD for short, is a synthetic asset that, like MakerDAO's DAI or Synthentix's sUSD, aims to maintain price stability by tracking the value of the dollar.
The implementation method is to adjust the supply to achieve balance through the rebase mechanism, so ESD is also an algorithmic stable currency and an elastic supply stable currency.
The basic core of ESD is "anonymity" and "selfishness", which are always consistent with USD.
ESD has a USDC-ESD liquidity pool on Uniswap that will be used as a price oracle for ESD.
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2. The difference between the rebase mechanism of ESD and AMPL
The ESD algorithm stable currency has improved the rebase mechanism of AMPL for better stability.
The rebas mechanism of AMPL is: if it is higher than 1.05 dollars, it will be inflation; if it is less than 0.95 dollars, it will be deflation. All AMPL holders will be treated equally, and inflation or deflation will be common.
1. If the ESD is higher than $1, rebase the new ESD. However, it is inflationary for all ESD holders, but it is regularly inflated to the liquidity provider of the ESD trading pair, the purpose is to ensure the stability of ESD and the liquidity of ESD;
2. If the ESD is lower than $1, a coupon (coupon) will be issued. Users can use ESD to buy coupons from the system, and hold coupons in exchange for more ESD when the ESD is greater than $1 in the future.
Note: Bonds are time-sensitive, and the timeliness is 90 Rebase, that is, 30 days after purchase. If the coupon expires and the ESD does not return to more than $1, the coupon will be destroyed.
3. After ESD generates debt, it will not rebase new ESD until the "bond" is paid off. Therefore, when the ESD price returns above 1USD, the "bond" will be repaid first, and the new ESD will be rebased after the repayment.
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3. The use of ESD "bonds"
In ESD, buying "bonds" is a game process. If the ESD fails to break $1 before the "bond" expires, paying off the debt means losing all the ESD they invested in buying the debt. If you bet right, you will earn a fortune, including:
1. (below face value) the difference between the ESD transaction price and $1;
2. The extra ESD brought by the "coupon" discount.
Benefits of "bonds" for ESD:
1. Self-generated demand: Investors who buy "bonds" can self-generate demand, ESD believes that only those with a lot of money can effectively use "bonds": they buy tokens to drive up the price and keep the price at the anchor above the exchange rate until the debt is paid off and the "bond" is redeemed.
