Partnered With:

Review Algorithm Stablecoin

Read this article in 62 Minutes

Fair Launch Finance reviewed the recently popular algorithmic stablecoin, and talked about its experience and the future development trend of algorithmic stablecoin

Original title: "Algorithm Stablecoin Mining Strategy, Experience and Future Development Trend"

Original source: Fair Launch Finance

1. New changes in algorithmic stablecoins

Let's review the development stages of algorithmic stablecoins.

First stage : In the rudimentary stage of development represented by AMPL, the rebase coin at this stage adjusts the currency balance of the holder’s wallet according to the currency price. This method of balance change cannot meet the basic needs of stable currency development: it is impossible for users to Basic functions required for stablecoins such as consumption and transfer by holding a coin whose balance changes every day. But AMPL has successfully tried a possibility on the blockchain to dynamically adjust the money supply according to market demand.

Second stage : In the initial stage of development represented by ESD/DSD, ESD is the first algorithmic stablecoin that introduces the bond model to solve the problem of deflation. This method can ensure that the balance of the user's wallet remains unchanged, laying the foundation for the expansion of stablecoin application scenarios in the future. basis for development. During the inflation period, users can obtain more inflation tokens by staking tokens. During the deflation period, speculators can buy coupons and destroy tokens to achieve deflation.

ESD/DSD It is an algorithmic stable currency using a single currency, that is, both inflation and deflation are completed through this single currency. During inflation, pledge tokens to get more tokens, and during deflation, destroy tokens to get coupons with different premiums, which reduces The willingness of token holders to use tokens for circulation is more important for speculative profit, which limits the long-term development of stablecoins to some extent. Stablecoins without circulation value have no long-term development value.

on the other hand ESD/DSD adopts a development model similar to the capital market. The earlier the entrants are, the more profitable they will be. The rapid riches effect has triggered a frenzy in the market. The crazy development compared with the inability to expand the application scenarios may be the development of ESD/DSD Bringing a huge potential crisis, it may collapse quickly when the digital currency market enters a bear market. Investing in this stablecoin requires extra risk control.

The third stage : In the mature development stage represented by BASIS, BASIS uses three tokens to simulate the US dollar issuance system, and the three tokens correspond to the three core tools in the US dollar issuance system: BAC corresponds to the US dollar in circulation, BAS corresponds to the equity of the Federal Reserve, BAB corresponds to US dollar treasury bonds.

USD currency based With years of experience in the stable operation of the issuance system, the development of BASIS has also achieved great success. Since its official launch, BASIS has been widely recognized by the market and continues to be in a period of inflation, and more and more traditional financial funds have begun to enter the BASIS stable currency system.

BASIS Designing The stable currency BAC and the equity currency BAS are completely separated, which solves the problem that the circulation of a single currency is difficult to strengthen. Investors and speculators focus on the investment transactions of BAS and BAB. Users can complete daily payments, consumption and transactions through BAC Basic functions of stablecoins.

BASIS as The pioneers of the three-coin separation still have a lot of room for improvement in the model, which brings opportunities for newcomers. These areas to be improved include: 1. A more equal start-up and issuance mechanism to ensure more people's Enter, instead of only allowing the earliest entrants or large funds to obtain the maximum benefits. 2. The equity currency BAS needs to introduce lock-ups and provide liquidity at the same time to help the long-term development of the ecology.

algorithmic stablecoin The essence is to challenge the legal currency issued by the country. After this stable currency develops to a certain stage, it will definitely trigger the country’s resistance. This can clearly see the government’s intervention power when the prototype basis.io of BASIS was forced to close by the US government, so Algorithmic stablecoins must be developed and operated in an anonymous manner, and at the same time, it is necessary to consider various impacts that may be brought about by strong government regulation.

2. Mining strategy and experience

Algorithmic stablecoin mining is to participate in the almost zero-cost coinage business. It is the investment method with the highest return in the current market, so it has attracted a large number of investors to enter the field of stablecoin mining, but Because this kind of investment is too early and the model is not perfect, the currency price may fluctuate violently, and the wrong investment strategy may make you return to zero overnight.

Common errors in mining include:

1. After entering the black market, all funds will be reset to zero. With the emergence of various forms of scams, there are also a large number of scams, such as digging so-called top mines through community invitations, which eventually lead to the loss of all principal. Learn how to identify scams in social media such as Telegram, WeChat, and Twitter. They are engaged in digital currency investment. a basic skill.

2, not Understanding the rules of the game leads to losses or unprofitability. Various stablecoins have different operating rules. For example, in ESD/DSD, the DAO pool and LP have different currency production conditions and unfreezing time. If you do not study the rules carefully, you may enter It leads to the embarrassing situation of seeing others continue to produce coins while being locked for a long time and unable to produce coins.

3. Select If you choose the wrong mining and buying and selling strategies, there may be different stable coin mining pools when using stable coin lossless mining, and each pool will have different mining speeds. Choosing a suitable stable coin mining may have a big impact. For many small-capital investors, direct purchase of share currency can often improve the return on investment, but the price of share currency fluctuates greatly, how to choose the right price to buy and sell is very important, otherwise it will be in everyone's hands You lose money when you make money.

4. MLM-style brainwashing blindly enters the project or reverses the transaction and leads to losses. We may be familiar with various WeChat group screen-swiping brainwashing to encourage everyone to stud. This kind of brainwashing follow-up often becomes a group of takers.

Mining experience :

1, Follow the right community and the right people. In a good community, everyone learns from each other and keeps improving. Eventually, everyone becomes an investment expert. In a bad community, MLM brainwashes everyone every day, and eventually turns everyone into a brainless leek, a batch of leeks After losing money and leaving the market, continue to cheat a batch of new leeks to come in and continue cutting. Try to avoid pyramid-style communities and group owners who don't think or learn.

2. Constantly Strengthen the understanding and cognition of the financial system, and learn more technologies. Most of the applications of digital currency are based on the application system of the financial system. Only a deep understanding of the financial system and its rules can quickly understand the various applications of digital currency and DeFi and quickly seize opportunities. The upstarts rising in this DeFi boom are almost all financial people with a deep understanding of finance.

3. At the same time Learning more blockchain technology can also allow us to avoid various pitfalls and quickly seize opportunities, such knowledge includes reading information on the chain, wallet tracking technology, manually operating smart contracts, reading and comparing smart contracts, etc.

4, more Learn the ability to understand and analyze people. There are real people behind every project. Before investing our hard-earned money, we must carefully analyze the people behind the project we invest in, whether they are criminals with evil hearts or fighting for ideals. entrepreneur? A 14-year-old with no business ideas or a serial entrepreneur with a lot of entrepreneurial experience? These people analysis capabilities help us maintain the highest success rate throughout the investment process.

5, more Do rational analysis and independent judgment to avoid brainwashing impulse. The most taboo thing when choosing an investment target is to blindly follow the wealth secrets of the so-called big coffee teachers, and make an independent, objective and rational analysis of all the information obtained before making investment decisions. In the unregulated blockchain financial market, most of the so-called industry experts are leek experts who make a living by absorbing coins at low prices and selling them to brainless leeks at high prices.

6. No Blindly judge projects with emotion, and be curious about all new projects. The most common comment we hear is: Don't touch this spicy chicken imitation plate. But in fact, most of the excellent projects started from Ethereum. You can see how many Ethereum imitations have achieved great success. So I will not jump to conclusions on any new project, and continue to study each new project with a curiosity.

7. Control Positions, no stud, no gambling, reasonable allocation of the investment ratio of each project. Betting on dogs seems to have become a fashion in digital currency investment. It does not look at the fundamentals of the project, does not analyze the potential, but only looks at the stud of public sentiment, but this is not investment, but gambling. The difference between investment and gambling is that gambling is a bet on a purely mathematical probability, while investment is a business model with an increasing probability of success. But even a seemingly good business model may have a black swan event, such as the hacking of the COVER project in the past two days. This kind of uncertainty can only minimize the loss caused by the problem by reasonably controlling the position.

8. Learn Take profit and exit at the set profit stop point, and don't be greedy for the last penny. There is no shortage of regrets around us. The most common one we hear may be that we regret not selling at a high point or buying at a low point. If we observe the investment behavior of investment masters, we will find that no master can always grasp the highest and lowest points to complete the transaction, and a greater proportion of their transactions fluctuate around the middle range. It is a necessary ability for a mature investor to make a profit and exit at the profit point set by oneself and then not look back.

3. Future trends and development

Just as the Bank of England emerged from the melee of private mints to help create the glorious history of the British Empire, we are witnessing a A coinage war based on blockchain technology will eventually produce a batch of decentralized algorithmic stablecoins that replace centralized stablecoins.

These algorithms are stable Is the currency a completely unsecured algorithmic stablecoin like ESD/DSD, or a partially collateralized algorithmic stablecoin like FRAX is trying, or an algorithmic stablecoin that uses a disguised mortgage such as LP lock-up mortgage? It is all possible, and it is also possible that a variety of different forms of stablecoins coexist.

as an investment Or what we need to do is to keep learning, keep curious about all kinds of new things and keep trying. Only in this way can we seize this opportunity with the greatest development potential. You may have missed Bitcoin, you may have missed Ethereum, but just grab this once-in-a-lifetime opportunity and you will have the kind of success you had mining Bitcoin with your PC 10 years ago!