Forget Smartcoins, How about Dreamcoins?

in bitshares •  4 years ago  (edited)

There is nothing that says that a Market Pegged Asset (MPA) price feed has to be attached to a real currency or commodity is there?

What would happen if we postulated a fictional currency with a desirable price feed behavior defined by well specified equation as a function of time instead of pegging it 1:1 to some market feed? Why not peg it to grow 1.05 to 1 annually and offset the reference currency's historic inflation rate or something?

Thought experiment:

Define an imaginary "Sumo" to have a value equal to the perhaps weighted Sum (USD, CNY, EUR) + 5% per year. Now its price feed relative to that basket is defined in advance for as far into the future as the reference currencies exist. Or perhaps the "Maxo" is defined as the price feed of the strongest SDR currency at any given time +5%.

We could create a "bitSumo" or "bitMaxo" that would behave like that fictitious "dreamcoin" currency and, viola, now we have a currency that will always outperform a specified basket or the best fiat currency by 5%.

Just dial the equation into Xeroc's bot to keep your favorite artificial currency collateral topped off to its completely predictable performance relative to the price feeds of it's poor, hapless, fiatic competitors.

Why track poorly behaving fiats and commodities when you can dream up you own ideal coin behavior?

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  ·  4 years ago (edited)

Responding to a question on from some of the Knights who say Nay about who would want such a dreamcoin and who would be willing to short it into existence:

Who would use a currency that functions like an inflation proof certificate of deposit guaranteed to appreciate against the best of the world currencies by +5%?

Um, all the money currently deposited in retirement accounts or passbook savings accounts earning near zero or negative interest.

Naturally, in the current doldrums where BTS is not reliably appreciating nothing much is happening.

But suppose, as the stated thought experiment, that some whacko rocket scientist were to allocate a million dollars to generate liquidity for the, um, Whacko which is a MPA with a definition equation representing the ideal dreamcoin.

Would there be a market for the dreamcoin?
Would that release of a megabuck worth of the Whacko onto the market take enough BTS out of circulation to start a virtuous upward price spiral that becomes self-sustaining?

Would such growth justify shorting into that demand where the speculator gives up 5% of the annual appreciation such a coin might stimulate?

  ·  4 years ago (edited)

I was thinking about this today. What if you could create a dreamcoin based on an average of several of the world's leading FIAT currencies but maybe allow holders to vote on the currencies used in the calculation? Or maybe a method of removing a currency from the calculation if a single currency hyper inflated?

Being able to specify an inflation rate on an UIA would be pretty damn cool, I miss the '5% interest on anything'.

Yes.  Perhaps you could predeclare the policy for automagically ignoring outliers that suddenly go black-swan.  Or you can simply define several dream coins with different formulas to suit different dreamers and let people choose their own safe havens.  That's part of the games people play.

That's quite an intriguing concept. My first impression is that it sounds too good to be possible.

I'm not smart enough to find a major flaw in it - apart from the obvious risk that to create such an asset you'd have to bet that BTS outperforms it. So the more of a dream-coin it is, the harder it gets to motivate its creation, but on the other hand it stimulates the demand for it (and its liquidity).

It would be interesting to hear an opinion from somebody who is more competent - @arhag maybe?

  ·  4 years ago (edited)

Correct. The bet that shorters are making is that they can clear a 5% higher hurdle, that's all.

In a down market (with the wind in your face) you may not clear a 0% hurdle. But with the wind at your back might even be able to generate more wind!