From Ampleforth to ESD, from Basis to Frax, in the DeFi booming cryptocurrency market, algorithmic stablecoins are constantly iterating, setting off huge waves again and again. At 4:00 p.m. on January 13, we invited three core developers of algorithmic stablecoins in the market - the founders of FRAX, MITH Cash and PEGS, to talk to BlockArk's chief analyst, Mo Ke, to discuss "the future of algorithmic stablecoins" . This is the first time that the Chinese encryption community has an open dialogue with multiple algorithmic stablecoin developers. This AMA live broadcast of the algorithmic stablecoin is supported by BlockArk, and supported by ChainNews, Odaily, BlockBeats, and Encryption Pavilion. Organized as follows:
Mo Ke: Hello everyone, I am Moc, the chief analyst of BlockArk.
Hello everyone, I am a scholar of Block Ark.
BlockArk is an investment banking and marketing firm, providing branding, user growth and marketing advisory. Founded in 2017, BlockArk has a background from Accenture, Tencent, Samsung and PwC.
Block Ark is an investment and marketing agency, providing brand positioning, growth and market consulting services. Founded in 2017, the core members are from Accenture, Tencent, Samsung and PwC.
We are so proud to invite 3 core developers of algorithmic stablecoins to discuss the "future of algorithmic stablecoins".
We asked three project party representatives to introduce themselves.
SauR0n：Sauron bleeds evil but in this case, believes in the Mithril cause and uses his evil instincts to coordinate efforts between the team and community.
Hi everyone, I'm Sauron, I believe in the cause of Mithril and use my evil instincts to coordinate efforts between teams and communities.
Sam：I'm Sam Kazemian founder of frax.finance, the first fractional algorithmic stablecoin. Before Frax, I was cofounder of Everipedia.org. Now I'm working on the fastest growing algorithmic stablecoin project in the space 🙂
Let me translate sam's introduction: I'm Sam Kazemian, founder of frax.finance (the first fractional algorithmic stablecoin). Before joining Frax, I was the co-founder of Everipedia.org. Right now I'm working on the fastest growing algorithmic stablecoin project.
James：Hi this is James from Pegs.cash. Pegs Cash is an algorithmic bank backed by real assets. We aim at exploring the wide adoption of algorithmic stablecoin in crypto world.
Hi everyone, I'm James from Pegs.cash. Pegs.cash is an algorithmic bank backed by real assets. Our goal is to explore the broad application of algorithmic stablecoins in the crypto world.
Mo Ke: Next, we will formally enter the communication session. If the audience has any questions, we will have a free communication session later.
Mo Ke: What do you think of AMPL/ESD, the earlier algorithmic stablecoins? Is your own project algorithmically innovative? What are the advantages and disadvantages?
What do you think of AMPL/ESD, the two algorithmic stablecoins that appeared earlier? Your own project is algorithmically advanced and innovative? What are the pros and cons?
SauR0n：We believe that a seigniorage shares model, that separates the stablecoin from the inflation token, has the best chance of wider adoption. Our team continues to innovate on a daily basis, with 3 passed Mithril Cash Improvement Proposals (MIPs) awaiting deployment as we speak. We prefer not to comment on other projects models.
We believe that a seigniorage sharing model that separates stablecoins from inflation tokens has the best chance of achieving widespread adoption. Our team continues to innovate every day, and at this time, there are 3 approved Mithril Cash Improvement Proposals (MIPs) waiting to be deployed. We wish not to comment on other project models.
Sam：Frax is the most innovative algorithmic project currently in crypto. We introduced the concept of a “fractional-algorithmic stablecoin.” The name FRAX means fractional-algorithmic currency. Before FRAX, there was no partial-collateral design and as you can see in this panel itself, there is already another project inspired by our design. So yes, I think we are the most innovative project in the space as of today.
Frax is the most innovative algorithmic stablecoin project in the current crypto space. We introduce the concept of "fractional algorithmic stablecoins". The name FRAX stands for Fractional Algorithmic Currency. Before FRAX, there was no partial mortgage design, and we can see that there is already another project inspired by our design. Yes, I think we are by far the most innovative project in this field.
James：We think that AMPL and ESD are relatively close.ESD has reduced volatility by allocating dividend rights to locked LPs and DAOs, and has developed debt functions to ensure that ESD values do not deviate too much from 1. But when the ESD gets too much in debt, it can't repair itself.
PEGS is an algorithmic stablecoin with asset collateral, so it can better anchor 1U and realize the value of 1U. At the same time, compared with MKR, PEGS tokens have more value capture function, can be used as collateral, and enjoy the dividends and buyback destruction.
We think that AMPL is relatively close to ESD. ESD reduces volatility by allocating dividend rights to locked LPs and DAOs, and develops a debt function to ensure that the ESD value does not deviate too much from 1. But when ESD has too much debt, it has no self-healing ability.
Pegs is an algorithmic stable currency with asset collateral, so it can better anchor 1U and realize the value of 1U. At the same time, compared with MKR, PEGS tokens have more value capture functions, can be used as collateral, and enjoy dividend rights and repurchase and destruction.
Mo Ke: In general, we think that Basis's algorithmic central bank model and Frax/Pegs's mortgage algorithmic stable currency model are more forward-looking representatives, so this time we invited them to share.
In general, we believe that Basis's algorithmic central bank model and Frax/Pegs' mortgage algorithmic stablecoin model are more cutting-edge representatives, so we invited them to share this time.
Mo Ke: What is the necessity of algorithmic stablecoins? What are the application scenarios in the future? We see that algorithmic stablecoins are not used as circulation no matter whether it is fundraising, exchange trading pairs, or reserve pools like Curve. People think that the algorithmic stablecoin is a variant of ponzi, how does the algorithmic stablecoin prove its use value?
What is the need for algorithmic stablecoins? What application scenarios will there be in the future? We see that algorithmic stablecoins are not currently used as circulation, whether it is fundraising, basic trading pairs on exchanges, or reserve pools such as Curve. In the opinion of many people, the algorithmic stablecoin is a variant of ponzi, how does the algorithmic stablecoin prove its use value.
SauR0n：At MITH Cash, we strongly believe that decentralized stablecoins will be the currencies of the future. The space is new and evolving quickly with a combined market cap of over $600M. Our project is only 2 weeks old, and we are already working with many DeFi partners to foster wider adoption across the board including more trading pairs and an upcoming StableSwap pool.
At MITH Cash, we firmly believe that decentralized stablecoins will be the money of the future. The space is new and growing rapidly, with a total market cap of over $600 million. Our project has only been live for 2 weeks and is already working with many DeFi partners to facilitate wider distribution, including more trading pairs and the upcoming StableSwap pool.
Sam：Algorithmic stablecoins increase capital efficiency and create trustless mediums of exchange. Algorithmic coins are the first fully decentralized way to hold stable purchasing power without custodial risk. I think they will continue to be one of the most important parts of DeFi.
Algorithmic stablecoins increase capital efficiency and create a trustless medium of exchange. Algorithmic stablecoins are the first fully decentralized approach to maintaining stable purchasing power without the risk of custody. I think they will continue to be one of the most important parts of DeFi.
James：Algorithmic stablecoins definitely need to be embedded in the crypto economy to realize their self-worth. At present, the market is mainly dominated by centralized stablecoins such as USDT.But with the stricter regulation, there must be room for algorithmic stablecoins in the future. Anti-censorship is the strength of the algorithmic stablecoin.
Some people doubts this as Ponzi, the reason comes from the scalability, no matter AMPL, ESD model of the single currency, or Mith, Frax, Pegs dual-currency model, has the scalability design. This design has two sides, although in the short term will give people the sense of Ponzi, but there's no denying it also greatly increase the user group of the algorithm stable coin. AMPL has proved that..
Algorithmic stablecoins must be embedded in the encrypted economy to realize their self-worth. At present, the market is mainly dominated by centralized stablecoins such as USDT. However, with the tightening of supervision, there will definitely be room for algorithmic stablecoins in the future. Censorship resistance is a strong point of algorithmic stablecoins.
For skeptical voices like Ponzi, we think this is brought about by the scalability of algorithmic stablecoins. Whether it is a single-currency model like AMPL or ESD, or a dual-currency model like Mith, Frax, or Pegs, they all have potential. Scalable design, this design has two sides. Although it will give people the feeling of Ponzi in the short term, it is undeniable that it has also greatly increased the user base of algorithmic stablecoins. This has been excellently verified on AMPL .
Mo Ke: The supervision of USDT has always been a potential black swan risk. Although the applicability of algorithmic stablecoins has not been revealed in the short term, it is definitely worthy of long-term attention.
The supervision of USDT has always been a potential black swan risk. Although the applicability of algorithmic stablecoins has not been brought up in the short term, it is definitely worthy of long-term attention.
Mo Ke: In the early stage of project operation, the way to attract users is mostly to give high APY to improve TVL. But after a period of time, the APY of liquid mining will inevitably decrease. In this case, how can we continue to attract external users to continue to follow the project?
In the early stage of project operation, most of the ways to attract users' attention to the project are to give high APY to improve TVL. But after a period of time, the APY of liquidity mining will inevitably decrease. Under such circumstances, how to continue to attract external users to continue to pay attention to the project?
SauR0n：Bootstrapping new DeFi projects through liquidity mining is a good way to get new projects off the ground. At MITH cash, our strategy revolves around generating new use-cases for MIC. We have many ambitious plans to make Mithril Cash as ubiquitous as USDC. However, our primary focus at this time is ensuring that MIC stays on peg and expands to a substantial circulating supply. We will then be in a much stronger position to develop and release new uses for MIC.
Bootstrapping new DeFi projects through liquidity mining is a great way to get new projects off the ground. With MITH Cash, our strategy revolves around generating new use cases for MIC. We have many ambitious plans to make Mithril Cash as widely used as USDC. However, our main focus right now is to ensure that MIC remains pegged and scales up to a large circulating supply. We will then be in an even stronger position to develop and release new uses for the MIC.
Sam：We have one of the longest LP programs lasting around 3 years. By the time that 3 years is over, FRAX will either be larger than Tether and USDC or we will have to vote with governance how to create new LP programs. Tether and USDC don’t need any LP programs haha they are already the most liquid cryptos and I think FRAX could get close to it this year.
We have the longest LP programs, lasting around 3 years. By the end of 3 years, FRAX may be bigger than Tether and USDC, or we will have to vote with governance on how to create new LP programs. Tether and USDC don't need any LP programs as they are already the most liquid cryptocurrencies, I think FRAX might get close this year.
Mo Ke: How to solve the problem of algorithmic stablecoins returning to $1 after falling below $1. We are concerned that ESD and BAC have been below $1 for a long time. When we observed that many investors felt panic about the BAB's 38 million redemption. And we also believe that a high premium pricing method such as BAB=BAC*BAC will generate more BAC circulation and cause market pressure. How to break this debt black hole when investors lose their confidence?
How to solve the problem of algorithmic stablecoins returning to 1 after being below 1, we are concerned that ESD and BAC have been below 1 for a long time. When we observed that many investors panicked about the payment of BAB 38 million. Moreover, we also believe that a high premium pricing method such as BAB=BAC*BAC will generate more future BAC circulation and cause market pressure. When losing investor confidence, how to break out of this debt black hole?
SauR0n：It is natural for investors to worry, given the price action we have seen in the space over the last few weeks. At MITH cash, we follow an iterative process that seeks to learn from industry experiences and we constantly adjust our protocol in order to make it more robust. With regards to debt issuance, we believe that the large number of bonds issued shows that investors have confidence in the protocol's ability to return to peg and expand again. It would be more concerning if there was no demand for bonds. Pricing is not the only issue here. We believe that tweaking our bond redemption mechanism and establishing a secondary market for bonds would alleviate many investors' concerns about the lack of exit liquidity once bonds are purchased.
Given the price action we've seen in the space over the past few weeks, investors are naturally concerned. At MITH Cash, we follow an iterative process that attempts to learn from industry experience, and we are constantly tweaking the protocol to make it stronger. With regards to debt issuance, we believe that the high volume of debt issuance demonstrates investor confidence in Protocol's ability to regain its peg and expand again. That would be even more worrisome if there were no demand for bonds. Pricing isn't the only issue here. We believe that adjusting our bond redemption mechanism and establishing a secondary market for bonds can alleviate many investors' concerns about the lack of exit liquidity after purchasing bonds.
Mo Ke: How to solve the problem of algorithmic stablecoins returning to $1 after falling below $1. Frax Finance's design is to guarantee redemption ability through the value of the collateral. The proportion of Algoithmic in Total Value is no longer small. If there is a crisis at this time that causes the prices of FRAX and FXS to fall, there will be panic and no one will use the recollateralize function, even if it is used, it will cause greater FXS selling pressure. At this time, there will be a problem of insufficient collateral, how to ensure that the FRAX price can be re-anchored to $1.
How to solve the problem of algorithmic stablecoins returning to $1 after being below $1. We can see that Frax is designed to guarantee this ability to pay through the value of the collateral. We can see that the proportion of Algoithmic in Total Value is not small. If there is a crisis at this time and the prices of FRAX and FXS fall, there will be panic and no one will use the recollateralize function. Even if it is used, it will generate greater selling pressure on FXS. At this time, there will be a problem of insufficient collateral. How to ensure that the price of Frax can be re-anchored to $1.
Sam：So far after 3 weeks of launch, this has not happened a single time with FRAX 🙂 so until it actually happens, in my opinion we don’t need to worry about it.
3 weeks after launch, so far not a single occurrence with FRAX. So until it actually happens, I don't think we need to worry.
Mo Ke: We believe that in reasoning, no project party has proposed a solution to the negative rebase that we think is bright. This point has yet to be verified. Basis is undergoing this test, and we need to maintain continuous attention.
We think that in terms of reasoning, there is currently no project party that has proposed to solve the death spiral problem that makes us feel bright. This also needs to be verified. Basis is undergoing this test, and we still need to maintain continuous attention.
Mo Ke: In historical experience, most of the forks will fail, and we have also seen a large number of projects that imitate Basis have failed. MITH Cash and Pegs Cash as forks, what changes have been made to Basis Cash and Frax Finance. How did MITH Cash and Pegs Cash succeed?
In historical experience, most imitation disks will die, and we have also seen that a large number of projects imitating Basis have died. Mith and Pegs as a copy, what changes have been made to Basis and Frax. How can Mith and Pegs ensure that they can survive.
SauR0n：MITH Cash has forged our own path on our quest to become the One Algo Stable to Rule them All. Rapid iteration is key. Ideas are a dime a dozen, execution and speed differentiate winners from laggards.
MITH Cash has forged its own path, striving to become an algorithmic stablecoin that rules them all. Rapid iteration and innovation are key. Execution and speed make laggards stand out.
Evolutions include:
- Seigniorage and Bond redemption threshold reduced to 1.01
- DAO fund is funded by just 1% of Seigniorage for a lean operation
- MIS stakers will now earn 20% of Seigniorage when bonds are outstanding.
- Time-weighted staking in the Boardroom has been voted on
- Giving MIS stakers additional rewards through a staking pool / community vault is being considered
Evolution includes:
- Seigniorage and bond redemption threshold lowered to 1.01
- DAO funds run lean with only 1% of seigniorage
- MIS stakers will now receive 20% of seigniorage when bonds are outstanding
- Board voted on time-weighted staking
- More rewards for MIS stakers are being considered through staking pools/community vaults
James：Thanks for the question. Fork is usual in the crypto world, and for the most occasions it's not going to be able to dislodge the status of inventor.
Thanks for asking. For the encryption world, Fork is not a problem. In most cases, Fork cannot shake the status of the creator.
We were early players and supporters of Basis, MITH and FRAX.We've seen MITH’s grow, and we've seen MITH's speed in DAO governance and iteration, which may be the reason why it has recently outperformed Basis in the marketplace and community.We also hold a significant amount of FXS, and as Sam said, we were inspired by FRAX. We choose Frax because there was scare of selling from private investors in the early community. As Sams said, we were inspired by FRAX. This led us to the idea of doing a collage-based algorithmic stablecoin for a Fair Launch.
We were early players and supporters of projects like basis, mith, and Frax. We have seen the growth of Mith, and the faster response speed of Mith in DAO governance and iteration. Perhaps this is the reason why it has been better than Basis in the market and community recently. We also hold a large amount of FXS. The reason why we chose frax is because we felt the selling pressure from private equity investors in the early community, which gave us the idea of making a collateralized algorithmic stablecoin for Fair Launch.
At the same time, we also believe that the current economic model of FRAX does not effectively energize the share token, so we propose the design of dividend.We believe both Frax and PEGS are pioneering experiments in the great crypto economy. And the ultimate option is depending on the market.At the same time, we don't see Frax as a competitor. The collateral algorithmic stablecoin is a growing market that can accommodate enough players.
At the same time, we also believe that Frax's current economic model does not effectively empower share tokens, so we proposed a dividend design. Both Frax and Pegs are pioneer experiments in the great encryption economy. The final choice is in the market. At the same time, we do not think that Pegs and Frax are in a competitive relationship. The collateralized algorithmic stablecoin is a growing market that can accommodate enough players.
Mo Ke: From the investor's point of view, we do not reject forks, but reject the proliferation of forks with no new ideas. At least during this time, MITH's overall performance is respectable, and PEGS has yet to be shown.
From an investor's point of view, we do not reject imitation offerings, but the flood of uninspiring imitation offerings. At least MITH's overall performance during this period is respectable, while PEGS has yet to continue to show.
Mo Ke: Are there any more open thinking for the design of algorithmic stablecoins?
Is there any more open thinking and design for the design of algorithmic stablecoins?
SauR0n：At MITH cash, we try to find a balance between simplicity and robustness of the system. By starting with a fairly simplified protocol, we have built a strong foundation from which to launch the future MITH ecosystem. We definitely agree that there is room for improvement. As Andre tweeted recently, constant product AMMs are not ideal for stablecoin swaps. We're working on our own innovative design that we'll be sharing shortly. Great things are coming from MITH cash!
At MITH Cash, we try to find a balance between simplicity and robustness of the system. Starting with a rather simplified protocol, we have laid a solid foundation for launching the future MITH ecosystem. We absolutely agree that there is room for improvement. As Andre recently tweeted, constant product AMMs are not ideal for stablecoin swaps. We are working on our own innovative design and will share it with you shortly. Great things come from MITH Cash!
Sam：Yes, Frax will be leading the way in fractional-algorithmic design a lot this year. We have many integrations in the pipeline and new features coming like a bond token and updated collateral options so that it is not just USDC.
Yes, this year Frax will take the lead in fractional algorithm design. We have many integrations in the pipeline and introducing new features such as bond tokens and updated collateral options, so it's not just USDC.
James：One of the things that we find interesting is that the demand for stablecoins is not just for dollars, but also for euros, yen, yuan, etc.
These currencies do not have good crypto stablecoin products due to their size.
For non - dollar asset investors to face the risk of exchange rate fluctuations.
The framework of the collateral-based algorithmic stablecoin is suitable for solving this problem. We have that in our roadmap as well.
What we find interesting is that the demand for stablecoins is not limited to dollars, but also euros, yen, and renminbi. However, these currencies do not have good encrypted stable currency products due to volume issues. Investors in non-US dollar assets face the risk of exchange rate fluctuations. The framework of the collateralized algorithmic stable currency is suitable to solve this problem, which is also the design planned in our Roadmap.
Mo Ke: Thank you for sharing, I have benefited a lot. If users have questions, we have 10 minutes of free questioning time, and our staff will collect and translate them.
【Free question and answer session】
【Free question and answer session】
Q: I want to ask MITH. MIC and BAC fell to less than $1 at the same time a few days ago. Now the price of MIC has been fixed, but BAC is still below $1. Some people think that it's Jeffery Huang's increasing positions and support that makes MIC community regain confidence. If Jeffery doesn't want to play one day, will MIC crush?
Excuse me, MITH, MIC and BAC fell below 1 US dollar at the same time a few days ago. Now the price of MIC has been repaired, but BAC is still below 1. Some people think that it is Jeffery Huang's continuous increase in positions and protection of the market that made the MIC community regain confidence. If one day Jeffery doesn't want to play, will MIC collapse?
SauR0n：I cannot comment on Machi's position because I'm not monitoring his wallets. However, it is true that we have major community members increasing position and new community members joining taking up new positions, which results in a strong peg of our MIC to $1.
I cannot comment on Jeffery's positions as I do not monitor his wallet. However, the positions of our main community members are also constantly increasing, and new community members are also constantly increasing their positions, which allows our MIC to remain pegged to $1.
Q: May I ask Sam, I really like Frax's design, especially the sentence:"Let the market choose the share of algorithmic stablecoins", do you have any plans to further increase Frax's market demand? Cause most value of FXS is from FRAX market demand:).
Excuse me, Sam, I like the design of Frax very much, especially the sentence: "Let the market choose the share of algorithmic stablecoins". Do you have any plans to further increase the market demand for Frax?
Sam：Yes, we want to get help from community members to increase our integration with other defi dapps. If you are in the FRAX community and hold FXS, help the project get listed on your favorite defi platforms because that is how we expand.
Yes, we would like to get help from community members to enhance integration with other defi Dapps. If you are in the FRAX community and hold FXS, please help the project to mention Frax on your favorite Defi platform, because this is how we scale.
Q: Hello Sam, I'm a loyal user of FRAX and have been participating in FRAX project since the beginning. But during this process, I found that many of centralized parts of FRAX, such as the price Oracle is constantly changing, the collaborative ratio can be directly modified by the contract creator, and the functions of gevernance and DAO on the web page are actually not open. When will FRAX give these permissions to the community?
Hello Sam, I am a loyal FRAX user and have been involved in the FRAX project since the beginning. But in the process, I found many places where FRAX is relatively centralized, such as the price source of the oracle machine is constantly changing, the Collateral ratio can be directly modified by the contract creator, and the functions of Gevernance and DAO on the webpage are actually not open. I would like to ask when FRAX will give these permissions to the community?
Sam：We are actually going to renounce ownership of keys as soon as enough FXS is emitted to make governance actions on the governance module. We also have set up a https://snapshot.page/#/frax.eth to allow for governance voting on important parameters. Right now, we have a bit of team control since we are not anon but after a few weeks, we will fully move over to the governance voting mechanism only+timelock.
In fact, we will relinquish the ownership of the key once enough FXS are produced by mint to perform governance operations on the governance module. We also set up ahttps://snapshot.page/#/frax.eth, to allow governance votes on important parameters. Right now, we have some team control, because we haven't had time yet, but in a few weeks, we will fully transition to a community governance voting mechanism (time-weighted voting governance model).
Q: Hey, guys, do you think that with more and more severe supervision, is it possible to bypass supervision to a certain extent by using algo stablecoins?
I would like to ask all the guests, do you think that at the moment when the regulation is becoming more and more severe, can the use of algorithmic stablecoins bypass the regulation to a certain extent?
Sam：100% yes, another way I like to think about algorithmic stablecoins is "trustless mediums of exchange"
100%, I think the alternative model for algorithmic stablecoins is "trustless medium of exchange"
SauR0n：Sam is right: By definition, algo stables are in themselves trustless mediums of exchange
Sam is right: Algorithmic Stability Zones are by definition themselves trustless mediums of exchange
James： Compared with the centralized stablecoin, the biggest advantage of algorithmic stablecoin is that it does not rely on any centralized institution to issue.
Anti-censorship is its biggest feature. Big reason for this algorithmic stablecoin explosion is that people have become less trust of institutions and more trust of math itself.
Compared with centralized stablecoins, the biggest advantage of algorithmic stablecoins is that they do not rely on any centralized institution for issuance. Anti-censorship is its biggest feature. The main reason for this explosion of algorithmic stablecoins is that people have less trust in institutions and more trust in mathematics itself.
Q: A year later, if MIC has not found a wide range of application scenarios, and the liquidity mining of MIS is finished, what will be done then?
One year later, if MIC has not found a wide range of application scenarios, and at the same time, the liquidity mining MIS has been mined, what should we do then?
SauR0n：Finding application scenario is the easy part. Once you're able to prove consistent reliable peg, application will come. 1 year is the time we have set for the project to achieve consistent peg.
Implementing other get application scenarios is easy. As long as you can prove that you can maintain the stability of the MIC, then the application will come. The goal we have set for Mith cash is to achieve a stable peg with a period of 1 year.
Q: Will digital RMB(DCEP) have an impact on stable currency?
Will the digital renminbi have an impact on stablecoins?
SauR0n：For sure, anything related to the Chinese economy will have major global impact. This is The Economy that the world is watching. How it will impact stable currency remains to be seen.
Of course, anything related to the Chinese economy has major global ramifications. This is the economy the world is watching. But how it will affect the development of stablecoins remains to be seen.
Sam: I really like how the digital RMB has a lot of promising use cases. I think it will lead the way in many parts of finance. I actually think it is a brilliant move to create it. But overall, I think there is great use for FRAX as well as digital RMB together even domestically in the PRC since they have entirely different use cases and denominations. I think they are symbiotic and help each other's value overall.
I really like that the digital yuan has many promising use cases. I think it will play a dominant role in many areas of finance. I actually thought creating it was a brilliant move. But in general, I think FRAX and the digital yuan will have a lot of use in China because their use cases and denominations are completely different. I think they are symbiotic and can help each other's value as a whole.
James : I agree with Sam that this is a good move. To some degree, I think centralization and algorithmic stablecoins will co-exist. In particular, the native DeFi stablecoin usage scenario will definitely be the home field of algorithmic stablecoin in the future.
I agree with Sam, it's a good move. At some point, I think centralized and algorithmic stablecoins will coexist. In particular, the local usage scenarios of DeFi stablecoins will surely become the main battlefield of algorithmic stablecoins in the future.
Q: A simple question to ask FRAX: why not use USDC directly, but use FRAX which mainly depends on USDC pledge?
A simple question to frax: why not use USDC directly, but use frax which mainly relies on USDC pledge?
Sam：Because FRAX is not completely backed by USDC. It is only 85% backed right now. Maybe next month it is only 65% backed. In 3 months maybe it could be 40% etc to 0%...and after a long time of FRAX usage it could be almost entirely algorithmic, private, and trustless stablecoin that is more stable than other algorithmic tokens that started at 0%.
Because FRAX is not fully supported by USDC. Currently only 85% is supported. Maybe next month only 65% support it. In 3 months, it could be 40% to 0%...and after a long time with FRAX, it could be a fully algorithmic, private and trustless stablecoin, better than other algorithmic tokens that start at 0% more stable.
Q: Thank you all for the fantastic sharing! May I ask @JamesKarn that with the involvement of seigniorage for every pegs, how can we provide the pegs cash to be declined under $1?
Thank you for your wonderful sharing! May I ask @JamesKarn how can we reduce peg cash to under $1 since every PRGS comes with seigniorage?
James : In theory the PUSD was worth $1, but in times of market panic the PUSD could reach $0.9, in which case clever users could make an arbitrage by buying the PUSD and making a profit of 0.1U.The act of buying will drive 1PUSD=1USD
Theoretically, the value of PUSD is 1 USD, but in times of market panic, PUSD may reach 0.9 USD. In this case, smart users can make arbitrage by buying PUSD and making a profit of 0.1U. Purchase behavior will drive 1PUSD = 1USD
Mo Ke: Okay, thanks to the three founders. We will post today's AMA on Blockark's Weibo/Twitter later.
Mo Ke: If you have questions about algorithmic stablecoins, you can also send them to the group to discuss with me. Overall, our investment in algorithmic stablecoins in the past month has been very successful. Regardless of whether it is on Basis, Mith or Frax, there must be good returns, and several obvious pitfalls have been avoided.
Finally, add the official websites of the three projects of today's algorithmic stablecoin session, you can click to view:
MITH Cash official website
Frax Finance official website
Pegs Cash official website
In the future, BlockArk will bring you more high-quality projects and content sharing. As long as you keep an eye on the Uniswap Chinese community, or follow @BlockArk Block Ark, you can get relevant information as soon as possible. The content review of this AMA will also be posted on Weibo, so stay tuned!
