BASIS (Basecoin) - stable crypto-currency: myth or reality?
Crypto market is overloaded with projects, that spend hundred thousand dollars on marketing, participate conferences, publish materials in top media sources, but don’t have any unique idea or technology.
BASIS (previously Basecoin) - is a totally different kind of project, that is going to change the stable coins' market and add more transparency into an unclear monopoly of Tether & Co.
Basis - a stable cryptocurrency with an algorithmic central bank, that is designed to keep prices stable by algorithmically adjusting supply.
When demand is rising, the blockchain will create more Basis. The expanded supply is designed to bring the Basis price back down.
When demand is falling, the blockchain will buy back Basis. The contracted supply is designed to restore Basis price.
The Basis protocol is designed to expand and contract supply similarly to the way central banks buy and sell fiscal debt to stabilize purchasing power. For this reason, team refers to Basis as having an algorithmic central bank.
Basis - a digital asset that stabilizes its own value and protects it from market volatility. Whitepaper draft describes a blockchain concept with built-in artificial intelligence, that manages monetary politics.
A global idea is that Basis protocol defines a pegged asset (this might be the USD, another fiat currency, an index like the Consumer Price Index (CPI), or a basket of goods), monitors price levels and adjusts the money supply by executing open market operations
In a short-term perspective, this idea is a good alternative for fiat currencies for crypto traders, in long-term - the instrument for stability ensuring that now centralized monetary systems are offering.
Basis team is going to separate themselves from previous tries of stable coins launches, by using the tokens combinations, in order to replace a centralized control how it’s implemented in Tether.
How does it work?
To keep price stable Basis protocol expands or contracts the supply of three classes of tokens:
Basis, Basis Bonds, Shares tokens.
- Basis. These are the core tokens of the system. They are pegged to the USD and are intended to be used as a medium of exchange. Their supply is expanded and contracted in order to maintain the peg.
- Bond tokens.Called bonds for short, these tokens are auctioned off by the blockchain when it needs to contract Basis supply. Since newly-created bonds are sold on open auction for prices of less than 1 Basis, you can expect to earn a competitive premium or “yield” for your bond purchase.
- Share tokens.Called shares for short, these are tokens whose supply is fixed at the genesis of the blockchain. When demand for Basis goes up and the blockchain creates new Basis to match demand, shareholders receive these newly-created Basis pro rata so long as all outstanding bond tokens have been redeemed.
Example 1: Expansion.
Suppose there are 500 bonds in the Bond Queue, 200 of which were created more than 5 years ago. Additionally, suppose there are 1,000 shares in circulation.
Suppose the system needs to create 1,000 new coins.
The system expires the 200 oldest bonds, leaving 300 bonds in the queue. If the
system needed to create fewer than 300 coins, it would only redeem the oldest bonds. However, the system needs to create 1,000 coins, so it redeems all 300 bonds.
The system still needs to create 700 more coins. The system distributes these 700 coins evenly across the 1,000 shares. Each share receives 700 / 1,000 = 0.7 coins. If you hold 100 shares, for example, you would receive 70 coins during this expansion, which you can then sell for USD.
Example 2: Contraction.
Suppose the system needs to take 100 coins out of circulation.
Suppose that there are two buy orders on the order book: One bid for 100 bonds
at 0.8 Basis each, and one bid for 100 bonds at 0.4 Basis each.
The system will fill the first order, giving the user 100 bonds in exchange for 100 * 0.8 = 80 coins. It will then partially fill the second order, giving the user 50 bonds in exchange for 50 * 0.4 = 20 coins. In total, 100 coins have been destroyed.
The core team consists of three friends, who studied in Princeton and graduated together with degrees in computer science. All of them have excellent experience in leading world companies and worked together in The D.E. Shaw & Co - a multinational investment management firm with 1300 employees and US$47 billion assets under management.
Worked on Search and Ads at Google and in algorithmic trading at D. E. Shaw & Co.
Worked in tech and quantitative finance at Google Search, Google Ads, and Radix Trading, and interned at D. E. Shaw & Co.
Worked in Algorithmic Options Market-Making at D. E. Shaw & Co.
Partners and ICO
The project didn’t have a standard ICO, all investments were gathered on closed rounds from the leading crypto funds.
In October 2017 Bain Capital and Andreessen Horowitz announced that they participated in the pre-sale of Basis. The project raised $ 3 million, and team focused on technologies R&D.
The hype around the Basis started in April 2018, when the team announced that they raised $ 130 million from different crypto funds on the main round. Just take a look at these companies:
Basis - not just another token, that will be launched during ICO hype. Cause it’s based on the conception of how to apply monetary theory to the latest technologies. As a results Basis has all chances to how public distributed registers (blockchains) and tokens could change the existing monetary system, which now is subject to human influence and mistakes.
Project founders claimed excess of US dollars transaction volume with Basis volume because of the fact, that Basis can carry out the work of the Federal Reserve - to maintain the stability of the assets. The protocol also could be used for the payments of salaries, loans, futures, options and other operations.
The core team is sure that a lot of traders, who want to become first currency holders and rapidly enter new markets, will support them.
So, we can suppose that someday Basis protocol will execute central bank functions. This will remove the human factor from the monetary system and make it’s work more stable, predictable and transparent.
Basis website: https://www.basis.io/
Read also our previous article: QuarkChain - blockchain that aims to achieve millions of transactions per second!