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NewBloc: Deriving 2021 Algorithmic Stablecoins from BAGS

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The spring of algorithmic stablecoins may be coming.

Original title: NewBloc: "Deriving the Beginning of Algorithmic Stablecoin in 2021 from BAGS"

Original source: New Bloc Strategy Analyst Barry

DeFi has developed rapidly in 2020. In the past year, the number of wallets participating in DeFi has increased from 58,000 Now there are about 200,000, a year-on-year increase of 466%.

At the same time, the transaction volume on the Ethereum chain has also increased from 21 billion US dollars in 2019 to 27 billion US dollars today billion U.S. dollars, an increase of 1178%, and the top 10 DeFi applications contributed 87% of the transaction volume on the chain. At the end of 2020, the total locked value in the Ethereum DeFi ecosystem reached an all-time high of $13 billion.

With the rapid development of DeFi, the spring of algorithmic stable currency may be coming. The hotly discussed algorithmic stablecoin.

AMPL is the algorithmic stablecoin that initially attracted widespread attention, and it has risen by more than 100% from the lowest price throughout 2020 The mechanism is that when the market price of AMPL exceeds the constant value of $1, additional tokens will be issued to the market, and when the market price of AMPL is lower than $1, it will deflate, and finally the price can fluctuate around $1 through supply control .

This kind of mechanism of AMPL also brings some hidden dangers. But the determinant of price change is not only supply but also demand. If the main demand for AMPL in the market comes from arbitrage or speculation, then when the price is lower than $1, the AMPL in the hands of investors will be reduced, and the speculative demand will also be greatly weakened , and when the price falls sharply, arbitrageurs may suspect that the game mechanism itself chooses to cut out the position, and finally forms the double risk of deflation + plunge.

Basis Cash is an improved version of the algorithmic stable currency, Basis Cash has three tokens, namely BAC (Basis Cash) , BAS (Basis Share), BAB (Basis Bond), the purpose of BAS and BAB is to stabilize BAC at $1, and stabilize the price of BAC through the game between the three tokens, keeping it fluctuating around $1.

When the price of BAC in the market is higher than $1, Basis will allow BAB to be redeemed to issue BAC to The market increases the supply, and eventually the BAC price can return to 1 USD; when the BAC market price is lower than 1 USD, users can use BAC to buy BAB, where the BAB price is 1 BAB = 1 BAC.

When the BAC price is lower than $0.95, the contract will open the BAC exchange BAB channel (BAB price = BAC price ^ 2 ). When the BAC price is higher than $1.05, the BAB exchange BAC channel (1 BAB=1 BAC) is opened. The vision is to rely on internal games to stabilize the price.

Basis Gold is Huobi Ecosystem (HECO) The first algorithmic stable currency project on the Internet, similar to BAC, there are three types of tokens in the agreement, namely BAG (Basis Gold), BAGS (Basis Gold Share) and BAGB (Basis Gold Bond). BAG and BAGS can be obtained through mining, where BAG is anchored at $1 as a stable currency, and BAGS holders can obtain the premium income generated by BAG after inflation by participating in the pledge.

BAGB is a bond issued when the price of BAG is less than $1 to repurchase BAG. When BAG returns to $1, BAGB holders can exchange BAG 1:1. The Basis Gold protocol not only guarantees economic resilience, but also can fully attract a wide audience, and the distribution of tokens is absolutely fair and free from human intervention and control.

The current price of BAG is higher than $1, because BAGS holders can get BAG generated after inflation by participating in the pledge Premium income, as long as the price of BAG continues to be higher than $1, it will be beneficial to BAGS, so that more incremental funds will enter the market to hold BAGS.

If the price of BAG is much higher than $1, the level of inflation will be higher, and holding BAGS will also be more Benefit, as more and more people hold BAGS, its price will rise further.

But when the price of BAG starts to fall but is greater than 1 US dollar, the deflation expectations start to appear, although BAGS can still get Inflation gains, but as previous holders of BAGS have substantial profit taking, they may start thinking about cashing out.

Amid the ongoing boom in DeFi, the algorithm is stable The continuous innovation of the currency may be further recognized by the market. The person in charge of the Huobi ecological chain once said that the algorithmic stable currency is a young track, and the key to success lies in whether it can quickly pass the deflationary cycle.

Basis Gold, as the first algorithmic stablecoin to debut on Heco, has established a strong community consensus and successfully Pass the test of the first cycle. With the rapid development of the cryptocurrency market, the application scenarios of Basis Gold will gradually increase. The demand for BAG will inevitably increase, and its currency price will rise accordingly. BAGS, which benefits from inflation, will also increase. further up.

We have witnessed the rapid development of DeFi in 2020, and its overall scale has increased by about 30 times a year. The popularity may lead to the launch of more projects this year. At this time, we do not predict how much the demand for DeFi will increase in 2021. With the launch of more DeFi projects, the demand for algorithmic stablecoins will also show a blowout growth. This may be 2021 great opportunity of the year.