Algorithmic stablecoins are not a hot spot in the market now, and it is difficult to perform well in the short term, and participating in algorithmic stablecoins also has extremely high risks. So what needs to be specially reminded here is that algorithmic stablecoins have zero risk. If you have no risk tolerance, you must not participate.
The reason why we still pay attention to the algorithmic stable currency when it is in a low period,secondary title
1. DeFi without algorithmic stablecoins is not real DeFi
Many people may just regard DeFi as a hype tool at the beginning, but from the perspective of Blue Fox Notes, we regard DeFi as the future development trend. From this perspective, defi Lego needs the last piece of the puzzle. This piece of the puzzle is algorithmic stablecoins.
At present, there are many stable coins in the entire defi, including stable coins based on legal tender, collateralized stable coins, hybrid stable coins with collateral and algorithms, and flexible stable coins, but there is still a lack of truly decentralized stable coins. Defi needs algorithmic stablecoins to accomplish its goals.
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2. Algorithmic stablecoins are the true holy grail of crypto
On this point, until now, the view of Blue Fox Notes has never changed. Whether it's at its peak or its trough, whether it's in the spotlight or under the radar, it's always been that way. It is not because of the rise of basis that Blue Fox Notes pays attention to algorithmic stablecoins. As early as 2018, Blue Fox Notes paid attention to it and published a related article "Comparison of USD T, BaseCoin and MakerDA O: Who will win?" "Thinking about Stablecoin Basis".
From the perspective of maturity, BTC > ETH > algorithmic stable currency, and from the perspective of potential, algorithmic stable currency > ETH > BTC, this view has not changed yet.
Algorithmic stablecoins are projects with extremely high difficulty coefficients, and the difficulty of their success is even greater than that of BTC at the beginning. Even the much-anticipated btc has been declared dead hundreds of times in history. Of course, the logic here is not to force the algorithmic stablecoin to be juxtaposed with BTC, because this logical sophistry itself has nothing to do with the success of the algorithmic stablecoin.
Btc's original goal was to become a peer-to-peer electronic payment system, becoming electronic cash. However, with the passage of time, BTC has not achieved its original goal, but has gone further and further in terms of value storage and circulation, and has increasingly become the "gold" of the digital age.
And the algorithmic stable currency may take over to complete the goal of btc. And this goal of btc has not been completed, can the algorithmic stable currency be completed? This is unknown, but in terms of difficulty, it is far greater than the goal of btc, but the advantage today is that few people would believe in btc at the beginning, and now there are many supporters in the encryption field.
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3. Algorithmic stable currency is an unprecedented human social practice
Scientific experiments can fail, and so can social practice. Social practice is more difficult, with more uncontrollable factors and greater uncertainty. Algorithmic stablecoins cannot be said to have been falsified yet, because they have not yet gone through a complete journey. But whether it will be falsified in the future is hard to say.
No one can guarantee that algorithmic stablecoins will be successful. Because this is a road that no one has ever traveled in the history of mankind, it is a narrow gate.
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4. Algorithmic stablecoins are not necessarily successful on a basis
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5. Algorithmic stablecoins are extremely risky and are not suitable for most people to participate in the early stage
The stable currency of the early algorithmic stable currency itself has no actual demand support, and is basically based on games. Its early days are highly speculative, and there will inevitably be great fluctuations. In the process of fluctuations, it must be a zero-sum game, and some people make profits based on others' losses.
Therefore, in the early days, Blue Fox Notes has always emphasized that if you are not familiar with the mechanism, it is best not to enter the game. This is also what Blue Fox Notes has always emphasized. Unless one has a deep understanding of the matter itself, it is best not to participate.
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6. What does algorithmic stablecoin rely on to gain a firm foothold?
For algorithmic stablecoins to gain a firm foothold, it depends on two points:
* Sustainability of demand for decentralized stablecoins
The current demand for Basis's stablecoin bac is mainly derived from liquidity mining, that is, earning bas, but it is not a sustainable process because there is no real source of demand. If only relying on this, it is undoubtedly a "perpetual motion machine", which is unsustainable.
To crack it, it is necessary to increase the actual demand. The basis team is naturally deeply aware of this, and they solve this problem from short-term, medium-term, and long-term strategies.
In the short term, try to stabilize prices through stabelswap's arbitrage and incentive methods; in the medium term, try to use synthetic assets and savings models to stimulate usage; in the long term, try to use the swap model to build its stablecoin index and break away from the US dollar anchor.
From the observation of Blue Fox Notes, the attempt of synthetic assets is crucial to the success of bac. It can deeply learn from the model of synthetix, guide liquidity by cooperating with protocols such as curve, and finally build the generation and integration of synthetic assets. trading network.
Of course, how it evolves in the end depends on the decision-making and implementation of the project party and the community, and whether it can make full use of this window period of defi development.
*Sustainable development of defi
Defi is the soil of algorithmic stablecoins. Algorithmic stablecoins cannot succeed without the fertile soil of DeFi. As long as defi itself can continue to develop, the practice of algorithmic stablecoins is likely to continue.
Today's defi is still small, but if defi exceeds the overall market value of trillions of dollars, algorithmic stablecoins will become a much-needed part of it. Of course, the current DeFi includes usdt, usdc, and dai, and the demand for algorithmic stable coins is not strong, or even dispensable. But with the continuous development of defi, this demand will become stronger and stronger. Defi is the support for the success of algorithmic stablecoins.
