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Hot Wheels Community (ID: FHBT18), Author: Pepe, reproduced by Odaily with authorization.Hello everyone, I'm Pepe. A friend said that he wanted to learn about algorithmic stablecoins, so let's talk about it today.Let me tell you something before we get to the point. Some of our content may seem like an afterthought. Recently, we have often heard complaints about why they have risen so much. In fact, many projects are still being updated repeatedly. One thing we need to be aware of is , It is difficult for us to have "foresight", unless there are really some information channels or something. .
Unknown true or false, for entertainment onlyLooking back, I often feel that it is simple and clear, but it may not be necessary to make a decision at the time. For example, luna, which appeared in the dialogue in the above picture, is also very popular recently. I think some group friends started when it was very cheap last year, but most of them were halfway I missed it for various reasons, just like now you don’t know whether it will continue to rise or fall.This wave of cottages that have soared five times and ten times in a short period of time, looking back at its line, many of them had a long-term shock and sideways market before, when watching other targets such as pancakes skyrocket. .However, we still need to be more optimistic. Will the current "afterthought" be "an afterthought" in the long run?Bitcoin, now looks at 60,000 U, but at 6,000 U, we still feel that it is so expensive. The potential of the counterfeit market may be even greater, and the real circulation of many alts may not need 10,000 big pies You can buy it, and looking a little further, the web3.0 we talked about before is still basically a concept, and it is still too early to realize it, so don’t worry, it should be yours. One day it will come.Back to the topic, algorithmic stablecoins, we started talking about this last year, for those who are completely new to this, please review this article:From price speculation to market value speculation, one article to understand the concept of Internet celebrity - algorithmic stable currencySince the defi field really started to explode last year, the amount of locked positions on the Ethereum chain has increased from the initial 1 billion to the current scale of more than 40 billion US dollars. Such rapid development in less than a year is inseparable from a In the gradually mature stable currency market.The goal of the algorithmic stablecoin is to solve some pain points in the stablecoin market, such as USDT, many people will worry about its opacity of centralization and potential regulatory risks, and DAI, which is formed by collateralizing ETH and other encrypted asset leverage, When the market fluctuates violently and the liquidation is not timely, there may be risks affecting the stability of its value.Therefore, some people are wondering whether it is possible to make a currency through specific mechanism algorithms and smart contracts, so that its price can be anchored to the US dollar as much as possible, but at the same time it can always exist on the chain and will not be affected by central supervision. , So the algorithmic stable currency was born. As for how to anchor, each company will have a different design.The earliest ampl issued and reduced the rebase directly in the account, by changing the circulation to get close to the balance of 1 dollar, to the esd debt model, when the price is less than 1U, it is not directly deducted, but recorded as a liability, and then it will be slow Slowly added liquidity mining to the algorithmic stable currency. .I think no matter what mechanism they adopt, at this stage, don’t look at them as stable coins. They are actually altcoins produced by mining, but it will have some specific additional issuance or destruction mechanisms.
Because the idea is very good, but the reality is very skinny. What we can see now is that the community of ampl was relatively large before, but firstly, there are still many problems in itself, and the popularity also changes with the price for a while. ESD is basically Declared death, and the previously popular basis is also very cold. Their problem may be that theory cannot solve human nature. There is no perfect mechanism to solve the death spiral when the price drops to $1. Now there are still In the projects that run some algorithmic stablecoin concepts, many of them have optimized the mechanism in order to be able to operate for a long time. However, if you want to do stablecoin competing products, it feels that they are still experimental and have great risks. exist.So from the perspective of investment or speculators, I think it is good to treat them as mining projects at this stage, and they can have a rate of return. You don’t have to think so far. Of course, you must also know that it is unstable. Some mechanisms for additional issuance They may be more risky than ordinary defi mines. We will not tout the concept, but we will not belittle it. After all, we don’t know what the future will develop. In short, it’s good to look at it rationally.
In the second half, let’s talk about two examples of algorithmic coins that are running. One is the USDC on Dafengshou that I am digging. Its name is quite confusing. It is not the stable currency USDC. Its current price is 3.8 Near U, that is, in a cycle of additional issuance.
As long as you pledge usdc/usdt, dfs/usdc, eos/usdc and other trading pairs to make a market, you can get additional usdc.His family has internal mechanisms such as reservoirs to ensure relatively stable inflation, and it will not cause a large amount of rapid inflation to form bubbles like some early coins when a large amount of funds flowed in for a short period of time.In terms of income, his family has always claimed that the annualized rate of 1600% has been stable for two months, but it is not that exaggerated.The above picture is taken by me now. The conversion of annualized 1600% to daily chemical 4.4 points refers to the unilateral income, that is, the income corresponding to the USDC standard. Suppose I have 1000U to put in for market making, and convert it into 500USDT and 500U of USDC, if you can dig out 20U worth of USDC in a day, the unilateral rate of return is 20/500=4%. If you do USDC/USDT pairing, you will actually experience about 2 points of daily profit.As for the doubling of the reinvestment, it refers to the doubling of the USDC standard. If the USDC produced by mining is matched (increased) with USDT to mine, your USDC position can be doubled in 18.7 days. If you produce USDC Sell half of it and exchange it for USDT to mine (without adding additional positions), the time for USDC to double is 31.6 days.It seems to be okay, right, but this is based on the relatively stable price of USDC. Many people think that the rate of return is high, but in fact, the compound interest of mining alone can double in a month or two. A lot, in this market where copycats are often several times a week, it’s nothing. Many people say that they are making money here, relying more on the rise of USDC. Except for the low and unstable situation at the beginning, the highest price has risen to 6U recently.https://www.floatprotocol.com/#/stake
For algorithmic stablecoins, the daily additional issuance is a bubble that enters the market. The reason why USDC can run for 75 days is still stable. On the one hand, it can be said that the mechanism delays the expansion of the bubble. It is a big investor with some sentiments, and the proceeds are reinvested directly, without thinking of selling in the past to make a profit.
Speaking of USDC, because it feels that people outside are afraid to enter it, and people inside don’t want to exit it. Reflecting what I have seen, there is no recommendation or not. It also said that the income mainly depends on the price. No one knows what will happen.
https://www.chainnews.com/zh-hant/articles/756225640513.htm
The other is the float that V is talking about, which is still relatively big on the ether. It is a market-making mining bank token, and it has been mining for a while.
