Algorithmic stablecoins are provably impossible without continuous funding
fragileequilibrium.substack.com
Algorithmic stablecoins are provably impossible without continuous funding
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Re: Algorithmic stablecoins are provably impossible without continuous funding
#2A lot of finacial theory jargon here but not a very clear explanation.
Definitely not a “proof” in the logical sense.
Likely the Vitalik post linked in this article will have some insight.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#3A lot of finacial theory jargon here but not a very clear explanation. Definitely not a “proof” in the logical sense. Likely the Vitalik post linked in this article will have some insight.
Vitalik says:
> While there are plenty of automated stablecoin designs that are fundamentally flawed and doomed to collapse eventually, and plenty more that can survive theoretically but are highly risky, there are also many stablecoins that are highly robust in theory, and have survived extreme tests of crypto market conditions in practice. Hence, what we need is not stablecoin boosterism or stablecoin doomerism, but rather a return to principles-based thinking.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#4Algorithmic stablecoins are impossible simply because all crypto not tied to outside assets can suddenly go to 0 value, and then any stablecoin is going to be worthless unless they are claims to outside assets (which requires trust in the issuer honoring them).
Re: Algorithmic stablecoins are provably impossible without continuous funding
#5Analysis aside, common sense suggests that it is very difficult if not impossible to manufacture long term stability in any system based mostly on speculation with limited hard assets to back it up.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#6Analysis aside, common sense suggests that it is very difficult if not impossible to manufacture long term stability in any system based mostly on speculation with limited hard assets to back it up.
indeed, but it's funny how we use the word phrase "'common' sense", isn't it?
Re: Algorithmic stablecoins are provably impossible without continuous funding
#7Not a crypto fan but I'm beginning to see that our entire economy is proving impossible without continuous manipulation by the fed
Re: Algorithmic stablecoins are provably impossible without continuous funding
#8Analysis aside, common sense suggests that it is very difficult if not impossible to manufacture long term stability in any system based mostly on speculation with limited hard assets to back it up.
More generally, I think we can state, it is difficult if not impossible to manufacture long term stability in any inherently unstable system, which all financial markets and human economies are. Better to acknowledge and accept that reality, understand the nature of the inherent volatility, and work to become robust and resilient against it.
Scalable, self-similar, clustering, and long memory are some of the characteristics of the fractal-style randomness of financial markets. Thus, build in safety factors, multiple redundancies, hedges, etc. with those characteristics in mind.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#9A lot of finacial theory jargon here but not a very clear explanation. Definitely not a “proof” in the logical sense. Likely the Vitalik post linked in this article will have some insight.
Vitalik says: > While there are plenty of automated stablecoin designs that are fundamentally flawed and doomed to collapse eventually, and plenty more that can survive theoretically but are highly risky, there are also many stablecoins that are highly robust in theory, and have survived extreme tests of crypto market conditions in practice. Hence, what we need is not stablecoin boosterism or stablecoin doomerism, bu…
I don't know if there are many that are robust in theory and in practice. MakerDAI is the only one I can think of that might fall into that category.
Re: Algorithmic stablecoins are provably impossible without continuous funding
#10Not a crypto fan but I'm beginning to see that our entire economy is proving impossible without continuous manipulation by the fed
Well duh, that is the whole point of the fed - tweaking the dials to smooth out the peaks and troughs. Sometimes that doesn’t work, or works only after the fact, but the last 70 years or so has been fairly smooth sailing compared to what came before.