Algorithm Based Assets & Targeting BTS as an MPA's reference asset!
I need to focus on getting the price feed scripts going for the HERTZ Algorithm Based Asset (ABA), I created the reference Haskell price feed script however this script does not result in a published HERTZ price feed.
If you're unaware of what an ABA is, it's simply a market pegged asset (MPA) which modifies its price feed in a predictable manner. Examples of ABAs are HERO (which increases the feed price by 5% per year), HERTZ (sin wave modification of the reference asset), and the theoretical NEMESIS (which decreases the feed price by 5% per year).
I've been thinking about the initial HERTZ asset's reference asset, and whilst the Bitsharestalk thread's vote on this matter resulted in the FIAT asset 'USD' being the preferred reference asset, I think that it may be risky for the first HERTZ asset to reference an external asset given the current inherent volatility of the cryptocurrency markets.
The pegging of the HERTZ asset to the CORE asset BTS (Bitshares) was proposed today, so effectively the Hertz token would fluctuate between 0.5 and 1.5 BTS throughout the month (Instead of $0.50 to $1.50 in Bitshares).
Why use BTS as HERTZ's reference asset?
- Less risk of force settlement due to BTS (or reference asset) price volatility.
- Decoupling of BTS from external assets.
- Less likelihood of global settlement events taking place due to reduced forced settlement risk.
- Predictable price volatility, enabling risk-free borrowing given sufficient collateral.
- No external asset feeds required, simply modifier*BTS.
I suppose it'd be the same as using bitUSD as collateral to borrow bitUSD into existence, except using the core BTS asset. A legit downside that the use of BTS as the reference asset instead of USD is that if Bitshares external price is incredibly volatile that this asset doesn't make for much of a safe haven unlike USD, unless you were to buy HERTZ as its increasing whilst BTS is decreasing..
What do you think? Switch to BTS as the reference asset for improved stability of the core HERTZ asset?
Any questions? Do reply!