Learn more about the principles of algorithmic stablecoins in this article?

It has been given great hope to solve the problem of centralization of legal currency-collateralized stablecoins and the problem of low capital utilization of collateralized stablecoins. However, there are currently no very successful projects in this field. The old generation of algorithmic stablecoins that have not made progress are fading out of our sight, but many new projects are emerging.

What is the principle of algorithmic stablecoin?

There are two algorithmic stablecoins on the market, one is ampl; the other is compound stablecoins such as esdbac. Since APL proposed the concept of rebase, the most imitated stablecoin this year is the rebase concept. The more imitations, the more innovative it is, and the more difficult the concept is to understand. If everyone understands it, there will be no need for imitations.

ampl has two things. One is the "basic value particle". This positioning is fixed when the project is released, which is what 2 talks about. The other is to make people recognize this positioning. Using Ampl as a unit of measurement in the blockchain world is to capture the market’s consensus on this positioning. This is an extremely difficult and long-term operation.

Theoretically, as long as the market recognizes it, the entire network can only need one ampl, which is a fixed exchange rate, such as 1ampl=0.0000001btc; 1ampl=0.0001eth; 1ampl=0.001uni, and the entire network may have a thousand There are thousands of different tokens, but as long as the market recognizes them, just use an ampl to mark them. But - but - this is impossible. The blockchain economy is an effective market with full competition. It is impossible. Tens of millions of tokens will automatically form an exchange rate with APL without any transaction. Remember, only transactions can mine value and generate prices! ! !

For example, for a new alice token, even if the entire network recognizes the basic value particle positioning of ampl, the entire network does not know how much the alice token is worth, so the alice token must be traded with ampl to know the value of the alice token. price. Transactions can set prices! Transactions generate prices! Therefore, it is impossible for the entire network to have only one Ampl to complete the pricing of all tokens. Every time a new token is issued, a corresponding number of Ampls must be issued to complete the effective pricing of the token. At the same time, a certain When a token dies or becomes devalued, the corresponding number of Ampl must be deflated. The total value of the entire blockchain economy network is constantly changing every second, and changes in the total value are priced through countless transactions with APL. The number of tokens is unlimited and can occur at any time. The transaction volume is always changing, and the pricing is always changing and in an unstable state. The ultimate goal of APL is to conduct value discovery and price pricing for the entire network - the economic measurement unit of the entire network.

What are the risks of algorithmic stablecoins?

Algorithmic stable currency is an unprecedented human social practice. Scientific experiments may fail, and so will social practice. Social practice is more difficult, has more uncontrollable factors, and is more uncertain. Algorithmic stablecoins cannot yet be said to have been falsified because they have not yet traveled a complete path. But it’s hard to say whether it will be falsified in the future.

No one can guarantee that algorithmic stablecoins will succeed. Because this is a road that has never been traveled by anyone in human history. It is a narrow gate.

In our view, algorithmic stablecoins will be DeFi’s continued pursuit, and they will benefit from the scale growth of DeFi’s overall ecosystem. As long as the DeFi ecosystem reaches a certain level of robustness, algorithmic stablecoins will be embedded in DeFi. in the system.

The above is the detailed content of Learn more about the principles of algorithmic stablecoins in this article?. For more information, please follow other related articles on the PHP Chinese website!