Categories
News

Tron’s foray into algorithmic stablecoins has had this effect on TRX (www.blockcast.cc)

A wise man once said “Algorithmic stablecoins are fast becoming the norm – protocol-issued dollars coming to every blockchain.” Like a self-fulfilling prophecy, two days ago, Tron launched its USDD algorithmic stablecoin. According to the founder and former CEO of Tron, Justin Sun, the Tron Blockchain intends to hold $10 billion in Bitcoin and other […]

Visit us at https://is.gd/vGG8T7

Categories
News

Three minutes to understand Olympus DAO: a fully mortgaged, free-floating algorithmic stablecoin (www.blockcast.cc)

Visit us at https://is.gd/EnChrL

Categories
News

The algorithmic stablecoin SafeDollar was attacked to zero, and the Polygon ecosystem also ushered in the hacker season? (www.blockcast.cc)

Visit us at https://is.gd/V2A8Pd

Categories
News

How does the algorithmic stable coin Float Protocol perform after its creation? (www.blockcast.cc)

Visit us at https://is.gd/1VNAQW

Categories
News

Understand the algorithmic stable currency Float Protocol operation mechanism and token economy (www.blockcast.cc)

Float is not anchored to a dollar. Like most major legal tenders, it floats and changes value over time.

Original title: “FLOAT-a new generation of purchasing power parity currency”
Source: Flying Little Big Toe

“Algorithmic stablecoin is the holy grail of the cryptocurrency field” (Blue Fox notes). With the continuous development of DeFi, USDT, USDC (and BUSD/HUSD, etc.) and DAI, which are currently responsible for basic settlement currencies, have obvious problems. To create a purely algorithmic stable currency, which completely decentralizes the entire monetary system through mechanisms and arbitrage, is an intuitively optimal solution; moreover, becoming a Defederal (DeFi’s Federal Reserve) is still very exciting.

Moreover, as MMT is popular today, and tomorrow when the global asset bubble will eventually burst, the reflection and optimization of the global currency system will continue to be raised in the next ten years, and attention to algorithmic stablecoin projects will not stop.

Since Ampl in the second half of 20 years, algorithmic stablecoin projects have emerged in an endless stream. At present, they can be roughly divided into the following categories:

  • Although the model of ampl and its imitators has been criticized by many people, and the imitators have basically died, ampl is still the most successful project in the field of algorithmic stablecoins;

  • esd and its imitators, the model has basically been declared dead;

  • Basis and its imitators, the bdo (sbdo) of bsc and the bag (bags) of heco currently survive well, but all the items on the eth chain are very bleak. At present, it seems that the “seemingly deflationary but actually inflation” scheme in the original bond mechanism of the basis is a culprit, and solving the problem of sheung shui is the key to sustainable survival.

In addition, there are Frax and its imitators, which are between mortgages and algorithmic stablecoins. Although the development is relatively stable, the ceiling is relatively low.

Recently, as the reflexer and Float protocol began to enter the mining stage, the concept of “ETH-based non-collateralized low-volatility currency” began to become popular.

Project specific introduction

Float defines itself as a web3-based floating, low-volatility currency (Floating, Low-volatility Currency for Web3), and the team is an anonymous team.

Token mechanism

There are two tokens in the project, Float and bank, among them:

Float is a “stable currency”, but the team claimed that Float is not anchored to 1 US dollar, but floats. “It, like most major legal currencies, is designed to float and change value over time.” The initial target price is US$1.618, and the target price will change with market conditions.

Bank is responsible for the stable value of Float (including reducing the value of Float during inflation and boosting the value of Float during deflation) and governance functions.

Stabilization mechanism

Every 24 hours, the system will trigger a rebase to re-stabilize the Float price through rebase. The process of rebase is that the user pays ETH (v1, v2 plans to introduce other assets, but v1 only has eth, which will be replaced by eth below) and BANK Come to the agreement to obtain a new Float (when inflation), or the agreement uses ETH and BANK to buy back Float (when deflation)

If the price of Float deviates from its target price:

  • During inflation, the system changes the supply and affects the price by casting Float. The specific realization form is a Dutch auction (arbitrageurs have the opportunity to buy a new Float at a price lower than the market price). The BANK received by the system will be destroyed, and ETH will be destroyed. Enter the vault

  • During deflation, the system changes the supply chain by buying and burning Floats to affect prices. The specific realization form is a reverse Dutch auction (arbitrageurs have the opportunity to sell Floats at a price higher than the market price), and the repurchased Floats are destroyed at the same time.

In this way, arbitrageurs can change the supply on the market and achieve stability.

Examples of inflation cycles

Assume that the current target price of Float is $1.50 and the market price is $2.00. In this case, the new Float will be put on the market at a decreasing price (starting at US$2.00 and gradually decreasing to a starting price of US$1.50).

Logically, the arbitrageur will obtain enough Float through auction and sell it to the market to bring the price closer to the target price.

When buying Float, arbitrageurs need to pay ETH and BANK. Normally (the treasury adequacy ratio is 100%), they pay 1.50 US dollars at the price of ETH, and the remaining 0.50 US dollars (market price-target price) are paid in BANK:

The ratio of ETH / BANK depends on whether there is a surplus or deficit in the vault factor during expansion (the vault factor will be described in detail later). In the case of surplus, some extra ETH will be stored in the “rainy fund” to support Float in extreme distress (vault factor <50%).

Examples of deflationary cycles

Assume that the current target price of Float is US$2.00 and the market price is US$1.50.

In this case, the agreement will purchase Float from the market at an increasing price (from 1.50 USD to 2.00 USD).

Logically, the arbitrageur will buy Float from the market and sell it to the agreement, so that the market price is closer to the target.

The agreement will pay ETH and BANK to purchase Float:

  • The ETH used to purchase Float comes from the vault;

  • The BANK used to purchase Float was cast out of the agreement;

  • Similarly, the ratio of ETH/BANK depends on whether there is a surplus/deficit of ETH in the Vault;

  • The Float purchased by the agreement is immediately destroyed.

In particular, if vault factor <50%, it will trigger the rainy day fund to repurchase Float

VAULT (Vault)

In the Float mechanism, ETH (or other basic “collateral” planned to be introduced in v2) is locked in the vault. In the initial stage, this part of the ETH in the contract will not be used for other things, just waiting for the Float to be repurchased during the deflation phase (it does not mean that it will not later). The vault is a key reserve that can pull Float back to the target price during the deflation phase. .

Through the ETH locked in the vault and using Float’s stabilization mechanism, there is a layer of “ambiguity” between “air” Float and “value coin” ETH:

In an ideal state (ie target price = current price), the market value of ETH in the vault and the float in circulation are the same, so the anchor of the total market value of Float is the market value of ETH locked in the vault.

Float is like a horse, and locked ETH is like gold on a carriage. The horse will continue to pull the carriage forward, whether it is forward or backward; the value of the horse itself may not be paid attention to by everyone, but everyone in the gold wants it, so the horse has value.

Moreover, from the current mechanism, the ETH locked in VAULT may only be released when Float enters the deflation phase, which will further increase the coupling between Float and ETH: a non-collateralized tight coupling.

In the initial stage of the project, if the strategy is appropriate, the high-priced Float will stimulate arbitrage demand, and then deposit a large amount of ETH into VAULT, which becomes the cornerstone of VAULT’s value.

VAULT FACTOR (Treasury Adequacy Ratio)

VAULT FACTOR = the market value of ETH locked in the vault / the market value of the target price of Float in circulation.

The following table describes the changes in the BANK value and VAULT FACTOR during the auction when the superimposed treasury adequacy ratio itself is in a state of surplus or insufficiency in the inflation phase and the deflation phase:

Assuming that the current vault factor is a, then when a-1>0, the vault factor is in a surplus state, otherwise it is in a insufficient state

Understand the algorithmic stable currency Float Protocol operation mechanism and token economy

It can be seen that only in the state of inflation and surplus (upper left), VAULT FACTOR will decrease; in the other four cases, VAULT FACTOR will increase.

The one that is slightly difficult to understand is in the state of deflation and surplus (upper right). Although the current VAULT FACTOR itself is already surplus, the occurrence of rebase will still increase the VAULT FACTOR.

In view of the role of VAULT on the anchor point of the entire system, the concept of VAULT FACTOR is actually very important. A surplus VAULT will make the entire system very healthy (over-collateralized). Therefore, in most cases, the system hopes that VAULT FACTOR can Elevated

The following figure is the official price backtesting situation in 2020: ETH price vs target price deviation ratio vs treasury adequacy ratio

Understand the algorithmic stable currency Float Protocol operation mechanism and token economy

Team member Paul gave a presentation at the hackclub, back-testing the daily price change percentage of ETH and Float:

Understand the algorithmic stable currency Float Protocol operation mechanism and token economy

Comparison of daily Float target price and ETH price changes & Float target price and anchored USD stablecoin:

Understand the algorithmic stable currency Float Protocol operation mechanism and token economy

Token distribution plan

The project adopts the form of democratic distribution, and unlike most projects, Float Protocol first started single currency mining for the governance token BANK (rather than digging stable coins first), and then start after the BANK distribution is basically completed. Float is cast.

The specific information distributed by BANK is as follows:

A total of 168,000 BANK will be minted in the first year. The expected distribution is as follows:

Community distribution: 50%, of which 37.5% is allocated in phase 1 and 12.5% ​​is allocated in phase 2

Team tokens: 5% (distributed after the initial coin minting ceremony, and locked for 12 months).

Ministry of Finance (treasury): 10% (minted at the beginning of the second phase of community distribution and controlled by DAO).

Liquidity incentive measures after issuance: 35% (5% of the initial circulation is minted, 30% is controlled by DAO, and the goal is to carry out various liquidity incentives and partnerships).

After 1 year, BANK may have inflation, which will be controlled by DAO at that time.

Phase 1 (starts at 22:00 UTC on Sunday, February 7th, lasts for 6 weeks, and ends on March 21st)

The project adopts a whitelist system. Currently, the whitelist consists of representatives of addresses that participate in the off-chain governance of any agreement on Snapshot.page and/or Compound, MakerDao or MolochDao on-chain governance addresses, and delegates of Year, UMA, YAM, and Curve. Whether it is in the whitelist can be checked after linking the wallet through the official website.

1,500.00 BANK will be allocated every day. A total of 10,500 BANK will be distributed every week, and a total of 63,000 BANK will be distributed on 6 Mondays.

Phase 2 (starts at 22:00 UTC on Sunday, March 21, and lasts for 2 weeks)

The second phase aims to provide extensive distribution to the top DeFI protocol community and realize the initial price discovery of BANK tokens.

Compared with the first stage, there will be no more whitelist restrictions. In addition, a new non-stable currency pool will be added, and a total of 1500 BANK (all pools) will be distributed every day

The full announcement will be provided one week before the start of Phase 2 (ie March 14).

In addition, in the second stage, the system will also incentivize the liquidity pool of BANK-ETH in order to better discover the price.

Initial Float Mint

After the audit of the agreement is passed, and after an 8-week distribution period, the initial Float minting will be held. During this period, users can use ETH to purchase Float, and the agreement will use 5% of the total BANK to incentivize purchases.

One week before the end of the 8-week initial distribution period (i.e. March 28), more detailed information about the number of floats that can be purchased and the exact mechanism of the initial coinage ceremony will be released.

Let’s block ads! (Why?)

Categories
News

Pantera Partner: Interpretation of the operating mechanism and development trend of algorithmic stablecoins (www.blockcast.cc)

The innovation of algorithmic stable currency is shaping the future of DeFi currency, and while maintaining price stability, it can play a key role in achieving secure digital transactions.

For a more comprehensive understanding of algorithmic stablecoins, read ” Selected Chain News | Understanding Algorithmic Stablecoins: Ampleforth, Basis Cash, ESD and Terra

Written by: Paul Veradittakit, Partner of Pantera Capital Translator: Lu Jiangfei

During the recent period, stablecoins have become a very hot topic, so I think if I can provide higher-level guidance, it should bring you a lot of help. In this field, some are centralized stablecoins anchored to legal tenders, and some are algorithm-based, non-collateralized decentralized stablecoins. Before entering the text, I would like to thank Lewis Freiberg of Empty Set Dollar and Dan Elitzer from Nascent. If you want to learn more about stablecoins, you can also check out the series of algorithmic stablecoins launched by the Delphi Podcast podcast.

Stablecoin overview

Stable coins refer to tokens issued on the public chain and linked to legal tender, and their value is usually anchored with stable “conventional” currencies such as the US dollar. Stable currency assets are designed to minimize volatility, allowing transfers and settlement transactions to be processed in US dollars on certain exchanges and DEXs, and provide traders with a way to obtain bitcoin and ether without price fluctuations. A good method for crypto assets such as Fang Fang.

Affected by the DeFi boom, stablecoins have achieved impressive growth in 2020. In fact, last week the Office of the Comptroller of the Currency (OCC) announced that federally regulated banks can use stablecoins for payments and other activities. As one of the main regulatory agencies of domestic banks in the United States, the Office of the Comptroller of Currency pointed out in a letter that the blockchain has the same status as other global financial networks such as SWIFT, ACH and FedWire, and recognized the use of stablecoins and cryptocurrencies. As a legal alternative to real-time payment systems. At present, the total value of stablecoins has exceeded 30 billion U.S. dollars. This figure fully reflects the increasing demand of investors for price-stable assets during turbulent times.

At this stage, there are about 200 stable coins in the cryptocurrency market. Among them, Tether and Centre’s USDC are the two stablecoins with the largest supply in the cryptocurrency market. Tether is especially popular with traders. Its market value has soared in recent weeks. Soon, it has now exceeded 21 billion US dollars. Since the beginning of 2020, the market value of Tether has increased fourfold, accounting for more than three-quarters of the stablecoin market.

Pantera Partner: Interpretation of the operating mechanism and development trend of algorithmic stablecoinsThe picture above comes from: The Block Crypto

In the rapidly changing crypto market, stablecoins have grown impressively. Unlike real U.S. dollars, they can be easily held or transferred in the digital ecosystem, allowing investors to obtain many blockchain technology advantages and P2P value transfer benefits. Not only that, traders also see stablecoins as a “buffer” before investing in high-risk cryptocurrencies. After purchasing stablecoins with U.S. dollars or other government-issued fiat currencies, traders can transfer the stablecoins to cryptocurrency exchanges to trade cryptocurrencies such as Bitcoin and Ethereum.

What is an algorithmic stable coin?

Algorithmic stablecoins use price stabilization algorithms to track a specific unit price-usually $1, and operate on a public blockchain backed by basic cryptocurrencies such as Ethereum (ETH). Algorithmic stablecoin prices are supported by market and technical mechanisms based on smart contracts. Smart contracts will lock encrypted collateral and implement price stabilization algorithms. Unlike other types of stablecoins, algorithmic stablecoins cannot be exchanged for US dollars at a 1:1 rate, nor are they backed by other encrypted assets as collateral. They are usually highly reflexive. The demand for algorithmic stablecoins is mainly driven by market sentiment and market trends, and the supply of tokens will also be affected by these factors.

In 2013, the first algorithmic stablecoin instance was launched on the Bitshares blockchain. Although the rapid growth of DeFi in 2020 has spawned algorithmic stablecoin projects like Yam and Based, the longest running algorithmic stablecoin so far is Ampleforth (AMPL).

For AMPL and similar algorithmic stablecoins, the supply of tokens will change as the target asset price changes (this situation is called “rebases”), and changes in the supply of tokens will affect every holder of algorithmic stablecoins. An account has an impact. The “Rebases” operation is usually performed within a predefined time interval, which means that the algorithmic stablecoin network is highly reactive. Generally speaking, there are two ways to adjust the supply of stablecoins to correct the imbalance between supply and demand:

  • When the price of stablecoins rises, the algorithm will increase the number of stablecoins issued;
  • When the price of stablecoins falls, the algorithm will reduce the number of stablecoins issued.

For example, we can design an algorithm in such a way:

  • If a stablecoin worth 1 USD drops below 1 USD, the algorithm can automatically set a market buy order to push up the price;
  • If a stablecoin worth 1 USD rises above 1 USD, the algorithm can automatically set the market to sell assets to lower the price.

On the other hand, some new algorithmic stablecoin projects (such as Basis Cash and Empty Set Dollar) will restrict the supply of tokens “Rebases” in order to eliminate the impact of supply changes on each wallet.

Pantera Partner: Interpretation of the operating mechanism and development trend of algorithmic stablecoinsThe picture above comes from: CoinGecko

Basis Cash is a new multi-token agreement based on the stable currency Basis-the stable currency project Basis successfully raised US$133 million in 2018, but it did not start. Basis Cash forked from Basis consists of three tokens:

  1. BAC-this is an algorithmic stable coin, the current supply of BAC tokens is close to 90 million;
  2. Basis Cash Shares-when the network is inflated, Basis Cash Shares token holders can request additional BAC tokens;
  3. Basis Cash Bonds-When the network is deflated, users can buy Basis Cash Bonds at a discount, and when the network exits deflation, users can use Basis Cash Bonds to redeem BAC tokens.

Basis Share and Basis Bond are designed to ensure that Basis Cash does not deviate from the anchor price of $1. For example:

  • When the transaction price of Basis Cash is lower than 1 USD, users can destroy Basis Cash and purchase Basis Bonds, which will result in a decrease in the supply of Basis Cash circulating tokens. Basis Bonds has no interest expense, no expiry date and expiration date, as long as Basis When the cash transaction price rises to more than 1 USD, users can directly redeem the Basis Bonds they have purchased;
  • When the Basis Cash transaction price is higher than $1, according to the smart contract, users can redeem Basis Bonds. As the demand for BAC tokens gradually increases, new tokens will be minted and distributed to Basis Share holders.

The initial distribution of Basis Cash tokens is 50,000 in total, and the token distribution will give priority to those users who deposit DAI, yCRV, USDT, sUSD and USDC tokens into the distribution contract. After that, the scope of token distribution will be expanded to users who provide liquidity for the Basis Cash (BAC)-DAI Uniswap v2 trading pair fund pool, where users can deposit LP tokens into the distribution contract and obtain Basis Shares.

Basis Cash was launched on November 30, 2020, and the lock-up volume peaked at nearly 200 million U.S. dollars at one time, and then dropped to 169 million U.S. dollars. In the beginning, DeFi traders were eager to provide liquidity for the project, which led to the annualized return rate of the BAC stablecoin liquidity pool reaching an astonishing 10,000%. At present, the daily return rate and annualized return rate of BAC/DAI are 1% and 365% respectively, and the daily return rate and annual return rate of DAI/BAS are 2% and 365% respectively.

Empty Set Dollar (ESD) is an algorithmic stablecoin inspired by Basis. It was launched in late August 202 and has a market value of more than 100 million US dollars. The core of the agreement is the ERC-20 token ESD, which is both the Empty Set Dollar protocol stable currency and the governance token. At present, the total supply of ESD tokens exceeds 500 million, and the single-day yield and 30-day yield are 4% and 206%, respectively. The single-day yield and 30-day yield of LP tokens are 1% and 40%, respectively.

Basis Cash is still in the early stages of development. In contrast, ESD has experienced multiple cycles of inflation and deflation. ESD has three main functions:

  1. Stability-By using Uniswap to incentivize the time-weighted average price (TWAP) oracle machine in the trading pool, ESD has achieved spontaneous supply inflation and deflation, aiming to stabilize the price at around $1 to reward the promotion of stability in the agreement Participants.
  2. Composability-ESD follows the ERC-20 token standard, enabling seamless integration of the entire DeFi infrastructure.
  3. Decentralization-ESD has always adopted decentralized on-chain governance, and the token holder community votes on any changes or upgrades to the protocol.

In fact, so far, among the more than 200 supply “epochs” (epochs) of ESD, 60% of the tokens have a time-weighted average price in the range of 0.95 USD and 1.05, which shows that the stability of ESD tokens is Ampleforth’s More than twice, you know, the birth of ESD is not long, and Ampleforth is currently the longest running algorithm stablecoin.

Pantera Partner: Interpretation of the operating mechanism and development trend of algorithmic stablecoins

ESD vs. Basis Cash

Like Basis Cash, ESD also uses bonds (“vouchers”) to “fund” agreement debt, but bonds must be purchased by destroying ESD tokens, and ESD can be redeemed if the agreement is inflated. However, unlike Basis Cash’s “three tokens” model, ESD does not have an inflation reward token like Basis Cash Bonds when the network is inflated after debt repayment. In order to solve this problem, ESD token holders can “stake” their ESD in the ESD Decentralized Autonomous Organization (DAO), and receive token distribution in proportion to inflation, with a ceiling of 3%.

The ultimate function of the ESD “staging” model is very similar to the Basis Cash Shares “three tokens” system. It is necessary to unbind the ESD tokens from the DAO during the “staging” period, and the ESD tokens will be temporarily “staging”. Deposit 15 epochs (5 days), during which time these tokens can neither be traded by their owners nor receive inflation rewards.

Binding ESD to DAO will bring liquidity risk, and buying Basis Cash Shares will bring price risk, but both methods will make users likely to receive inflation rewards in the future. However, the “temporary storage” requirements for bound ESD and unbound ESD from DAO will also cause additional “time risk” and insufficient liquidity, which are unique problems of ESD.

Pantera Partner: Interpretation of the operating mechanism and development trend of algorithmic stablecoinsSource: Lewis Freiberg

It is worth mentioning that stablecoins have brought new regulatory challenges. According to the US Congress Act-the “Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act”, stablecoin issuers must obtain bank charters before issuing any stablecoins. ) And regulatory approval. Algorithmic stablecoins like Basis Cash, and other stablecoin issuers that currently operate without a bank charter are all regulated by this bill. You may be worried about the closure of Basis.io or possible supervision in the future. The founders of the Based and ESD algorithm stablecoin projects are anonymous. Despite the continuous development of regulation, the innovation of algorithmic stablecoins is shaping the future of DeFi currency, and while maintaining price stability, it can play a key role in achieving secure digital transactions.

The bifurcation of Basis and ESD

As a branch of the Basis Cash and ESD protocols, some new algorithmic stablecoins have appeared on the market. For example, Mithril Cash is a fork of Basis, and the algorithmic stablecoin project was launched on December 30, 2020. The economic model function of Mithril Cash is very similar to the central bank’s determination of the target value of fiat currency. By buying and selling bonds, Mithril Cash controls the entire supply of tokens to achieve the target value of $1. The smart contract that executes the algorithm behind the Mithril Cash token MIC will maintain the token price between US$0.99 and US$1.01 to ensure long-term predictability and reliability.

The Mithril Cash protocol has three tokens:

  1. Mithril Cash (MIC)-This is the stable currency in the Mithril Cash system with a target value of $1. Currently, the circulating supply is close to 29 million pieces.
  2. Mithril Share (MIS)-This is an ownership token that can be rewarded with inflation. People who pledge assets in the agreement can get MIS tokens.
  3. Mithril Bond (MIB)-These bonds each hold the value of one MIC, and once the price exceeds $1, one MIC can also be redeemed. Both MIC and MIB aim to increase prices and guide MIC to reach its target value.

With the increasing demand for powerful stablecoin options, Mithril Cash provides a very promising and reliable token model.

Dynamic Set Dollar is another brand new algorithmic stablecoin, which is a fork of ESD. The protocol has two main functions:

  1. Stable value
  2. In the phase of inflation and deflation, speculators have opportunities for profit.

Dynamic Set Dollar has launched a price reactive ERC-20 algorithmic stablecoin DSD, which has improved the ESD protocol, including:

  1. Increase the coupon redemption penalty to reduce the impact of robot trading programs manipulating the price of tokens;
  2. The epoch cycle time is reduced to 2 hours to make the agreement more responsive to price fluctuations.

Using DSD, although the robot trading program can still perform token exchange transactions, the impact on the agreement will be greatly reduced.

The influence of stablecoins will increase

The emergence of stablecoins has facilitated transactions and value transfer, effectively combining the efficiency, security and speed of digital currencies with the stability of legal currencies. At present, the scale of global stablecoin transactions has reached billions of dollars, and the demand is still growing.

In the ever-evolving economic and technological era, stablecoins have played the role of disruptors in the traditional payment and financial industries. In this era, financial products and system products provided by large technology companies are replacing traditional bank services. For example, Facebook’s Libra stablecoin project may attract large-scale adoption by users, which in turn may reshape the digital payment landscape and bring new challenges to the global financial system, sovereign legal currency circulation, and monetary policy.

U.S. regulatory regulations are also advancing with the times. For example, the Office of the Comptroller of the Currency (OCC) recently approved banks to use stablecoins, highlighting the growing demand for institutional customers to use stablecoins for banking and authorized payment activities. It is estimated that in the next ten years, about 70% of the added value in the global economy will come from digital platforms. Stablecoins provide a secure and price-stable new payment system, which is very suitable for dynamic financial markets.

Source link: www.veradiverdict.com

Categories
News

Algorithmic asset experiments continue to entice traders & developers (www.blockcast.cc)

As the team behind Morph.Finance can attest, developing an algorithmic stablecoin project can be every bit as frustrating and thrilling as investing in one. 

While algorithmic assets have retreated from mid-December marketcap highs, the space has nonetheless continued to attract intrepid investors and developers aiming to position themselves at the forefront of a new financial vertical — though it remains an open question if such projects will ever achieve stability.

Largely formed in the mold of defunct 2018 project Basis, algorithmic assets are designed to automatically adjust the total circulating supply of a token based on preset conditions, such as time or price. While they’re ostensibly intended to hew to a peg, such as the US dollar, containing and mitigating volatility has proven to be a notoriously difficult problem to solve.

So far these assets have remained somewhat on the fringe of decentralized finance (DeFi), with the top three projects — Empty Set Dollar, Frax, and Dynamic Set Dollar — accounting for just half a billion in marketcap between them, per Coingecko. Yet traders keep lining up to take spins at the rebase casino, and there’s ongoing development into new products like BadgerDAO’s forthcoming DIGG — a synthetic asset meant to track the price of Bitcoin. It remains new, exciting, and largely unexplored territory.

A more stable stablecoin

In an interview with Cointelegraph, the anonymous developers of Morph.Finance — formerly Dynamic.Supply — recounted their story trying to build a sustainable project in the space, a story with just as many ups and downs as an algo stablecoin chart.

“Dynamic.Supply was a simple Basis fork with modified variables, which launched in early January,” said the team. “We tried to limit whale/bot accumulation by capping the maximum number of tokens per TX during the first hour of launch, but this was unsuccessful.”

The team explained that deep-pocketed ‘whale’ traders hoovered the tokens shortly after launch, and proceeded game the rebase parameters in their favor.

“There was no lockup on the boardroom initially, which opened us up to yield sniping, where users would buy and deposit large amounts of DSTR right before the end of an epoch, collect the rewards, then market dump everything before repeating a few hours later.”

The manipulation discouraged early community members and even some of the developers. Others, however, remained undaunted.

New features, new problems

As is often the case in startup stories, the obstacles led to ingenuity. In the case of Morph, the ingenuity came in the form of a Zapper contract allowing algorithmic stablecoin liquidity providers to quickly switch between other project pools to theirs. 

In the short term it bolstered liquidity, but in the long term it might also allow Morph to “introduce a market-wide LP zapper system that benefits all farms” — an innovation that could buoy the whole space.

But even the new on-ramps to the weren’t enough to stabilize the peg.

“Liquidity significantly improved, however our tokenomics were working against us,” the team said. “Emission of DST and DSTR were both far too fast, leaving us with insufficient time to get new arbitrage mechanics rolled out.”

In order to combat their overaggressive token emissions, the team deployed new contracts, rebranded, and asked the community to transfer their tokens — a process that led to significant griping about gas fees in social channels, as well as no small amount of anxiety that the team might be planning an elaborate rugpull.

Twitter trader @CryptoSpider1 was among those who held his stake through the migration to the new contracts, and said in a statement to Cointelegraph that “rugpull” risks are a part of being on the emerging frontier of the space.

“High risk = high reward, and the dev has shown he/she has no interest in rugpulling but creating something interesting that challenges the current model,” he said.

Next steps

As of 8 pm EST today, just a few weeks after launching as “Dynamic.Supply,” the project has reopened liquidity pools, completing Morph’s “metamorphosis” — converting DST and DSTR tokens to Morph Coin (MORC) and Morph Tracker (MORT), along with the new name, website, and emission rate. 

The Zapper feature — the first of what Morph hopes will be a series of contributions to the space — has also been carried over from the old brand.

A series of shuffles, tweaks, and innovations, all from a handful of devs and intended to push the algorithmic asset space forward.

It’s an open question as to if Morph’s changes will bring their asset stability, just as a similar concerns swirl around most, if not all algorithmic asset projects. But when asked about the future of Morph and projects like it, the Morph team already had further innovations on the mind.

“Utility! Without it, Morph, and all similar projects will eventually fizzle out. That’s not what we want, we’re aiming to build a sustainable ecosystem that we hope will bring real value to our users.”

Go to Source

Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Andrew Thurman

Categories
News

Algorithmic asset experiments continue to entice traders & developers (www.blockcast.cc)

As the team behind Morph.Finance can attest, developing an algorithmic stablecoin project can be every bit as frustrating and thrilling as investing in one. 

While algorithmic assets have retreated from mid-December marketcap highs, the space has nonetheless continued to attract intrepid investors and developers aiming to position themselves at the forefront of a new financial vertical — though it remains an open question if such projects will ever achieve stability.

Largely formed in the mold of defunct 2018 project Basis, algorithmic assets are designed to automatically adjust the total circulating supply of a token based on preset conditions, such as time or price. While they’re ostensibly intended to hew to a peg, such as the US dollar, containing and mitigating volatility has proven to be a notoriously difficult problem to solve.

So far these assets have remained somewhat on the fringe of decentralized finance (DeFi), with the top three projects — Empty Set Dollar, Frax, and Dynamic Set Dollar — accounting for just half a billion in marketcap between them, per Coingecko. Yet traders keep lining up to take spins at the rebase casino, and there’s ongoing development into new products like BadgerDAO’s forthcoming DIGG — a synthetic asset meant to track the price of Bitcoin. It remains new, exciting, and largely unexplored territory.

A more stable stablecoin

In an interview with Cointelegraph, the anonymous developers of Morph.Finance — formerly Dynamic.Supply — recounted their story trying to build a sustainable project in the space, a story with just as many ups and downs as an algo stablecoin chart.

“Dynamic.Supply was a simple Basis fork with modified variables, which launched in early January,” said the team. “We tried to limit whale/bot accumulation by capping the maximum number of tokens per TX during the first hour of launch, but this was unsuccessful.”

The team explained that deep-pocketed ‘whale’ traders hoovered the tokens shortly after launch, and proceeded game the rebase parameters in their favor.

“There was no lockup on the boardroom initially, which opened us up to yield sniping, where users would buy and deposit large amounts of DSTR right before the end of an epoch, collect the rewards, then market dump everything before repeating a few hours later.”

The manipulation discouraged early community members and even some of the developers. Others, however, remained undaunted.

New features, new problems

As is often the case in startup stories, the obstacles led to ingenuity. In the case of Morph, the ingenuity came in the form of a Zapper contract allowing algorithmic stablecoin liquidity providers to quickly switch between other project pools to theirs. 

In the short term it bolstered liquidity, but in the long term it might also allow Morph to “introduce a market-wide LP zapper system that benefits all farms” — an innovation that could buoy the whole space.

But even the new on-ramps to the weren’t enough to stabilize the peg.

“Liquidity significantly improved, however our tokenomics were working against us,” the team said. “Emission of DST and DSTR were both far too fast, leaving us with insufficient time to get new arbitrage mechanics rolled out.”

In order to combat their overaggressive token emissions, the team deployed new contracts, rebranded, and asked the community to transfer their tokens — a process that led to significant griping about gas fees in social channels, as well as no small amount of anxiety that the team might be planning an elaborate rugpull.

Twitter trader @CryptoSpider1 was among those who held his stake through the migration to the new contracts, and said in a statement to Cointelegraph that “rugpull” risks are a part of being on the emerging frontier of the space.

“High risk = high reward, and the dev has shown he/she has no interest in rugpulling but creating something interesting that challenges the current model,” he said.

Next steps

As of 8 pm EST today, just a few weeks after launching as “Dynamic.Supply,” the project has reopened liquidity pools, completing Morph’s “metamorphosis” — converting DST and DSTR tokens to Morph Coin (MORC) and Morph Tracker (MORT), along with the new name, website, and emission rate. 

The Zapper feature — the first of what Morph hopes will be a series of contributions to the space — has also been carried over from the old brand.

A series of shuffles, tweaks, and innovations, all from a handful of devs and intended to push the algorithmic asset space forward.

It’s an open question as to if Morph’s changes will bring their asset stability, just as a similar concerns swirl around most, if not all algorithmic asset projects. But when asked about the future of Morph and projects like it, the Morph team already had further innovations on the mind.

“Utility! Without it, Morph, and all similar projects will eventually fizzle out. That’s not what we want, we’re aiming to build a sustainable ecosystem that we hope will bring real value to our users.”

Go to Source

Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Andrew Thurman

Categories
News

Can algorithmic stablecoins change the oligarchic pattern of stablecoin financing assets? (www.blockcast.cc)

Algorithm The algorithmic stable currency in the fourth quarter of 2020 is on fire, and the slogan of the post-defi era was once called out. According to the analysis algorithm, the stable currency relies on the algorithm at the time of design to ensure the stability of the currency price. Its existence is like a social experiment.

Recently, the eighteenth issue of Catcher Academy hosted by Chain Catcher invited xy from xy studio to share the theme of “Understanding the logic and potential of algorithmic stablecoins from 0 to 1”.

Question: Algorithmic stable currency is a hot topic recently. Why is it popular? Can you tell us about the operating mechanism of algorithmic stable currency?

xy: The popularity of the algorithm currency should start from the amplifier. It is this well-known “split disk” that has brought a steady stream of heat and traffic to the concept of the Rebase algorithm. Only when the algorithm currency will flourish in the fourth quarter of 2020.

Regarding the operating mechanism, the algorithmic stablecoin uses a regular rebase mechanism to keep its currency price at its anchor price (currently mostly US dollars). If the currency price is greater than its anchor target, it will use an active inflation mechanism (positive Rebase, directional additional issuance of currency rights, etc.) to fill the premium. If the currency price is less than its anchor price, it will use active deflation mechanisms (negative rebase, selling coupons, etc.) to provide momentum for the currency price to restore anchor pricing.

Question: Many people thought that “algorithmic stablecoins are a false proposition”, which are unstable and have no long-term value. What do you think of this statement?

xy: I personally do not agree with this rude view. If it is only for the pure rebase algorithm stable currency during the amplifier-dominant period, then this view is tenable.

Although the pure rebase amplifier stabilizes the currency price at the anchor price, its rebase soaring and slumping currency volume only brings opportunities for speculation and gambling to retail investors. Due to the daily rebase of the currency volume, it does not exist as an ecosystem. The premise of financing assets.

And the team seems to sit back and watch the situation, so there is no problem in questioning them from the motivation. But the algorithmic stablecoin has developed to the present, I think it has appeared valuable projects, and can already see that there are products that can compete with the industry’s largest on-chain stablecoin issuance program. In terms of issuance methods and plans, rebase obviously brings more liquidity to the method of mortgage asset issuance.

Question: Some people think that algorithmic stablecoins are “split disks”. In your opinion, what is the essence of algorithmic stablecoins?

xy: First of all, the term “splitting disk” refers to pure rebase coins headed by Ampl, as is the baseprotocol, which was extremely popular in November.

However, I think that the second phase of algorithmic stablecoins led by esd and basis has moved away from the scope of only providing split volatility disks. They have made theoretically-supported improvements based on the rebase of amplifiers, such as directing the positive rebase of inflationary issuance to lock dao, LP bond or equity currency holders, and improving the negative rebase of deflation and production into coupons and selling ( Burning token), bond exchange (similar to coupons mechanism) ecological option bonds, etc.

All these have made the “algorithmic stablecoin” change from a “split disk” with no ecology at all to a native “chain stablecoin” with a foundation for construction.

At the same time, the rebase is directed to equity and bonds, so that the “algorithmic stable currency” has the possibility of ecological expansion, that is, it becomes a financing asset with a constant volume and price on the user side.

Q: What do you think of the current competitive landscape of algorithmic stablecoins and the skyrocketing of ESD, BASIS, FRAX and other projects?

xy: I try to summarize from what I can see, but still keep my distance, because the market is changing so much, I still hope everyone can think for themselves.

In terms of market value scale, esd>basis>frax; in terms of the simplicity of the token economic model, frax>esd>basis; in terms of the volatility seen in the mechanism setting, I think it is basis>esd>frax.

The community types and economic mechanisms behind the rise and fall of these projects are not the same. The rise and fall are the views of currency speculation. In general, it is the inflow of hot money for the new concept track.

However, if it can survive after rushing in, it means that the project ecology has an opportunity. This opportunity may be an opportunity for construction or speculation, but it all shows the vitality of the project.

Question: From which dimensions will you analyze whether you want to invest in an algorithmic stablecoin project? Can you review the process of your successful Nuggets algorithmic stablecoin project?

xy: There is no difference between the dimension of analyzing algorithmic stable coins and the dimension of analyzing general projects. It can be divided into three aspects: First, whether the project economic model is logically self-consistent; Second, whether the basic improvement for rebase is based on real needs; Third, fundamental information (team, development, chip distribution, etc.)

I don’t have the experience of digging a project from the beginning, but after getting hot, I get income by studying its economic model and chip distribution investment.

For example, in the early stage of the last round of expansion of esd, after finding that only a few thousandths of its circulation pool was needed to raise the currency price above the water, I bought some 45% premium coupons. For me, This is an investment with a high probability of return.

Q: In which dimensions can the current algorithmic stablecoin project be innovative?

xy: I may be more conservative about innovation. From a project perspective, Frax’s plan is currently my most promising. This plan should have a few more to race, I suggest that everyone pay less attention to innovation, and more attention to ecological development. If only some pseudo-demand innovation like brainstorming, it will only bring stupid money ponzi. Of course, this is good news for gamblers who like to flush dishes.

Question: As a pioneer of the three-currency separation, BASIS has brought many opportunities to newcomers, but there are still loopholes in the model. What aspects of these needs to be improved include?

xy: Basis has not yet entered a period of ecological development. If you want to challenge its model, you have to wait for it to complete a complete round of water/underwater operations.

But in terms of economic mechanism, basis provides the most flexible mechanism among these projects. For example: the separate currencyization of stocks and bonds, as well as the indefinite period of bonds and the violent algorithm of bac/bab. In terms of high volatility and elasticity, it is indeed the most complete.

Question: The speculative nature of algorithmic stablecoins is inevitable. Will it always be subject to extreme expansion and contraction cycles? Why?

xy: Since there is no daily limit / limit down mechanism, it should be said that the speculative nature of projects in the development period is inevitable.

I don’t think that algorithmic stablecoins will always be subject to such an unhealthy cycle. For example, Frax transfers the long and irregular periods of expansion and contraction to the market value of its equity tokens. Moreover, in my personal opinion, esd has also entered a relatively stable cycle, and it is now more likely to encounter a ceiling problem.

Question: The cost of investors entering the field of stablecoin mining is very low, and it is also an investment method with high returns in the current market. At the same time, what risks will they face? What are the good strategies and suggestions?

xy: Since its data is on the chain, the risks faced by investors are more clear than other projects. Therefore, when investing in such projects wisely, there are more clear opportunities. The suggestion is to watch more and less move, and then go on after you understand.

I have given an example of the investment strategy above. Once you understand its operating mechanism, you can at least guarantee that you will not lose money. It will be better to talk about making money on the basis of not losing money.

Secondly, it is easier for people with good mathematics to play algorithmic stablecoins, and a lot of money can be calculated using formulas.

Question: Algorithmic stablecoins are still in the early stages of development. What development trend will there be in the future? How do you view the finality of algorithmic stablecoins?

xy: “Bold prediction”, next year there will be 1-2 projects with more than 10e dollars and recognized by mainstream defi. What we currently see, for example, esd will be listed as a trading pair on curve, these are proofs of ecological development.

The emergence of algorithmic stable currency projects will fundamentally change the current situation where the original stable currency financing asset makerdao dominates the chain.

Categories
News

Algorithmic stablecoin: game between program and human nature, hidden capital risk behind innovation (www.blockcast.cc)

The emergence of Basis Cash has given the outside world a different definition of stable currency. Through the elastic supply adjustment mechanism, Basis utilizes the Basis Cash (BAC), Basis Bond (BAB) and Basis Share (BAS) in the system, relying on the dual power of the market and the algorithm, to keep the BAC stable at about $1.

IOSG Ventures, a venture capital firm in the crypto industry, has made a vivid analogy, which regards BAC, BAB, and BAS as the U.S. dollar, U.S. dollar Treasury bonds and Fed stocks respectively.

Theoretically, if the BAC is higher than $1, the system will issue a certain amount of BAC through the algorithm to stabilize the currency asset price, and BAS holders can get BAC dividends; when the BAC is less than $1, users can buy BAB at a low price with BAC (Bond bonds) gain arbitrage space and destroy BAC at the same time, forming a deflationary effect to promote the rebound of currency prices.

Compared with USDT and DAI, Basis’s model not only guarantees decentralization, but also does not require asset collateral. It wants to take advantage of human profitability and use the market and algorithms to mint stable coins.

It is regarded by many people in the industry as a currency reform, but there are also other arguments that the three exercise tokens in the algorithmic stable currency do not have full redemption rights and profit support, and are completely dependent on the capital investment of later generations. , With Ponzi color.

An even more comical scene is that the search for a stable currency price with algorithms is often due to human greed or fear, which leads to instability of stable currency. It is either anchored above 1 US dollar, or if it falls, it cannot rise to 1 US dollar. After Basis became popular, a series of “imitations” quickly appeared in the algorithmic stable currency sector. Some projects were suspected of being cashed out by the development team, and no one paid any attention after the currency price fell below $1.

Algorithmic stablecoins also showed two sides of the coin, and were engulfed by cheers and doubts. Under the surface of popularity, whether the algorithmic stablecoin can enter the room or not will need to continue to experiment to get the result.

Basis Explosive Algorithm Stable Coin Sets New DeFi Trend

DeFi, which was originally stolen by the skyrocketing mainstream crypto assets, has faintly begun to gain momentum recently, but the leader is no longer Uniswap, Compound and other “Old DeFi”, but an algorithmic stablecoin project called Basis Cash.

Basis wants to use an algorithm to adjust the money supply mechanism to mint a stable currency anchored to $1. This is different from the more familiar USDT and DAI.

USDT is issued under the endorsement of the centralized entity Tether. The essence of USDT is to ensure the rigid redemption of 1 USDT and 1 U.S. dollar by storing assets such as U.S. dollars in the bank. Its disadvantages are obvious. One is that Tether’s asset reserves in banks are not transparent and may be over-issued; the other is that USDT has been facing regulatory risks and is prone to thunderstorms.

DAI is to generate stablecoins on Ethereum through over-collateralization of ETH and other assets. Compared with USDT, it is more decentralized and has stronger anti-censorship capabilities. However, the over-collateralization mechanism leads to low asset utilization.

Basis has adopted an unprecedented way to “redefine” stablecoins. There are three roles in the Basis system, namely BAC (Basis Cash), BAB (Basis Bond) and BAS (Basis Share Equity). Among them, BAC is a “stable currency” anchored to the value of 1 US dollar, BAB is equivalent to bonds, and BAS is equivalent to the equity of the issuer. Both BAB and BAS are designed for the goal of “BAC equals $1”.

BAC (cash) and BAS (equity) can be generated through pledge mining/liquidity mining. The initial mining will limit the supply, which causes the price of BAC to far exceed $1 in the initial stage of the project. After the coin supply is rebase, the system will issue a certain amount of BAC through the algorithm, so that the price of BAC will return to $1. The first generation of algorithmic stablecoin AMPL is designed in this way.

Unlike AMPL, when the price of BAC is less than $1, users can use BAC to buy “bond” BAB. The price of BAB is set as the quadratic of BAC. For example, if the price of BAC is 0.9 US dollars, then the price of BAB is 0.9 * 0.9, or 0.81 US dollars, which is equivalent to buying at a discount. BAC as purchasing power will be destroyed to achieve a deflationary effect.

If the BAC rises above 1 U.S. dollar, the BAB (bond) in the user’s hand can be exchanged for BAC 1:1, and the price difference will be generated in the middle, and the user can earn the difference.

Another token, BAS, is used as equity, which can be obtained by providing liquidity to the two trading pairs BAC-DAI and BAS-DAI. These equity can wait for BAC to be issued and exercised. For each additional issuance of BAC, the system will repay the bonds first, and users can use BAB 1:1 to exchange for additional BAC; the remaining BAC will be used as dividends and distributed to BAS holders.

This system has a loop like this-

Users who want to obtain equity (BAS) need to conduct liquidity mining, and mining needs to buy BAC or BAS, which will increase the demand for two currencies (Note: the initial 50,000 BAC pledged by 5 stable currencies The staking pool for generating and completing the initial issuance of BAC has been cancelled at present).

When the BAC is higher than US$1, it will pay dividends to BAS holders; if it is lower than US$1, it will be deflationary and provide users with arbitrage space by issuing BAB bonds. Basis uses this method to ensure that the price of BAC is maintained at about $1.

IOSG Ventures, a venture capital firm in the crypto industry, has made a vivid analogy, which regards BAC, BAB, and BAS as the U.S. dollar, U.S. dollar Treasury bonds and Fed stocks respectively. Put these concepts into it, and you will find that the BAC minting issuance is similar to the US dollar issuance.

Due to the high profitability of early liquid mining, Basis quickly became popular once it was launched. Just as Uniswap led to the birth of a large number of AMM (Automatic Market Maker) exchanges, many developers also imitated Basis to produce “imitation disks” on different blockchain networks. For example, there are Basis Coin and Mith Cash on Ethereum. There is Basis Gold on the Heco chain, and USDX on the EOS chain.

The hidden capital risk behind innovation

According to IOSG Ventures, algorithmic stablecoins such as Basis have the characteristics of decentralization and censorship resistance. It creates a unique way of stabilizing currency prices without collateralizing other assets, making full use of people’s profit-seeking characteristics, relying solely on market will and algorithms for regulation, and having the opportunity to realize a truly decentralized stable currency for the first time.

In today’s encrypted asset market, participants have realized the strong demand for assets such as stablecoins on exchanges and blockchains. However, the existing stablecoins in the market have their own drawbacks. For example, the USDT issued by a centralization has the risk of opacity and weak anti-censorship capabilities, while the stablecoin DAI issued by pledge of other assets has the defect of low capital utilization caused by capital locking. The emergence of Basis seems to let people see a new way of generating stablecoins.

Some people in the industry believe that the potential of algorithmic stablecoins and algorithmic synthetic assets is unlimited. Under the situation that centralized stablecoins are subject to more and more stringent supervision, the demand for algorithmic stablecoins may increase significantly and even become the mainstream choice.

However, algorithmic stablecoins such as Basis are still in the experimental stage, and the idealization of the adjustment mechanism cannot keep up with the real environment of the market. For example, due to liquidity mining incentives, market demand has surged, leading to a bubble stage. Even after many rounds of rebase, the price of many algorithmic stablecoins is still higher than 1 U.S. dollar, which makes “stable coins” seriously de-anchored and extremely unstable.

When rewards are reduced or disappeared, or there is no new capital entering the market, algorithmic stablecoins may present systemic risks. For example, when a certain algorithmic stablecoin drops below 1 U.S. dollar, the market does not want to convert it into bonds, but sells it directly, which may cause the stablecoin to enter a death spiral and fall rapidly.

There are precedents. “Imitation” Basis Coin’s algorithmic stable currency BCC has fallen to about $0.5. There are rumors that its founding team smashed the market and ran away. After the market lost confidence in it, the situation was naturally that the funds fled and its “self-balancing system” was destroyed.

There is another argument that simply points the essence of algorithmic stablecoins to the “funding market.” According to the mechanism of this kind of stable currency, if you want to obtain Cash (stable currency), you need to hold Share (equity); while obtaining Share, you must either buy Cash or buy Share to pledge mining, which is more like a creation out of thin air “Internal Needs”.

Although IOSG Ventures treats the three token rights in the algorithmic stable currency as the U.S. dollar, U.S. dollar Treasury bonds and Fed stocks respectively. But whether it is Cash, Bond or Share, they are essentially different from the above three assets. They are not supported by full redemption rights and profits, and they are completely dependent on the capital investment of later generations. Therefore, although the algorithmic stable currency considers currency flexibility, this flexibility relies on a zero-sum game.

But the financial blogger “Ziyubit” believes that the algorithmic stablecoin is a mathematical financial experiment. Although it is likely to fail without government bank endorsement, it does not affect the interesting process of this financial experiment. Regarding the nature of the algorithmic stablecoin, whether it is a capital market or an innovation depends on the perspective from which to look. “I saw a little shadow of BTC on Basis, as well as the charm of mathematics. It may have a capital side and a currency reform side.”

Algorithmic stablecoins who want to use human nature in the financial market underestimate the complexity of human nature. The trend of algorithmic stablecoins led by Basis has indeed brought a new trend of DeFi, but this model is indeed still in the experimental stage and there are drawbacks. At this time, the entry of funds will not rule out that it will be the cannon fodder of “test failure”. The emergence of “pan” will inevitably accelerate the process of bubble bursting. When investors participate in algorithmic stablecoins, they must understand the mechanism in detail and carefully evaluate multiple risks.