Three supports for algorithmic stablecoins

Currently, algorithmic stablecoin projects are on the rise, including base, frax, float, fei, rai, etc., but so far, they are still in the experimental stage, and they haven't really gotten a foothold. In the end, only time will tell us who can get out. But there are three very important factors:

• Project party resilience

Algorithmic stablecoins are destined to be the narrow door. This differs from more obvious DeFi projects such as loans and DEX. These are all business. There are transaction fees that everyone can see at a glance, and there are clear, large-scale needs. The success of these tracks is inevitable, it remains only to ask which one will work.

For algorithmic stablecoins, if they want to be successful, they have to go through hardships, because all they have to touch is the "Holy Grail". How can it be so easy to touch the "Holy Grail"?

If you want to wear a crown, you have to bear the weight.

Don't look at team jumps in a bullish market, but look at the persistence of the team in a bearish or trough market.

• The stablecoins mechanism is table, and adoption rate is core

Is a hybrid mortgage mechanism more likely? Or is a completely unsecured model more likely? Is a treaty-driven funding model more appropriate? Or is the elastic change model more appropriate?

The initial tone has a big impact on his long-term development. However, if the team is good at repeating, it can continue to improve based on existing practice.

In the long term, the stability mechanisms of the stablecoins are the appearance, the exterior, and the framework. The real essence is the ecological development of the stablecoins themselves, and that is the level of application.

• Community support

The development of any encryption project is inseparable from community support. When faced with setbacks and difficulties, some people fall down, some pay bills, and some never leave. This is the source of the vitality of a project.

This is especially true for very difficult and very risky algorithmic stablecoin projects. In order to let go of the ordinary project building logic, there must be a certain degree of purity of idealism, and even some tradeoffs, required to promote the sustainable development of the project.

Early Ecological Basis

For algorithmic stablecoins, the stable mechanism is just appearance, the external, and the internal foundation is ecological perfection and increased adoption.

The base must know this well. This can also be seen from the road map "Basis's Algorithmic Stable Coin Road". Basis plans to launch Base V2 in the next two weeks.

• Basic loan

Basis plans to launch its lending product on April 1, 2021. As far as the current situation is concerned, Basis lending was originally borrowing its internal assets. The purpose of borrowing is to increase the efficiency of its capital, while improving the application scenario, introducing more gold diggers, and obtaining a longer time for its development.

In Basis lending, he first supports lending six assets: BAC, BAS, BAB, UNI LP BAC / DAI tokens, UNI LP BAS V2 / DAI tokens, and DAI. At the same time, it also determines the largest LTV for each asset based on its volatility, where the most stable DAI is 80%, and BASv2 the most volatile is 50%.

Specific lending details and mechanisms are expected to be released in a few days.

What does Basis borrow mean

The Basis loan product has two purposes:

• Improve capital efficiency, help users increase income, and enable more people to participate in the Base ecosystem;
• Ecological landing and adoption of Bases enhances their use scenarios, thereby facilitating their stability.

With a loan project, Basis's internal assets have the opportunity to use leverage. This is the same as a Maker DAO loan. With Maker's loan, ETH gets a greater utilization rate.

For example, Base lending allows its users to maximize LP token income which provides liquidity. It turns out that users provide liquidity for BAC / DAI at Uniswap, and can benefit from BAS V2 and transaction fees. With Basis loans, users can pledge their BAC / DAI LP tokens, lend more BAC and DAI, and provide BAC / DAI with greater liquidity, thereby increasing their income.

Not only mining liquidity, but also borrowing to get more seigniorage income (when BAC is higher than $ 1 anchored, the Base system will issue additional BAC). For example, after providing liquidity to BAC / DAI, users can pledge their LP tokens and borrow BAS V2 tokens. Then deposit the borrowed BAS V2 token to the Meeting Room to get additional BAC results.

There are also scenarios, Basis also mentioned, you can use a combination of BAC Vault and its borrowing to get more benefits. In the future, Base V2 will dynamically issue BAS V2 token rewards for BAC / DAI LP and BAC Vault. If there is a Basis loan agreement, BAC Vault can use the pledged BAC as collateral, thereby lending more other assets, such as BAS V2 or DAI, to maximize its BAC Vault income, and at the same time, it is not necessary to sell BAC- his.

Token of Basic Loan Agreement

The Basic Loan Agreement will issue a new token. The special token mechanism has not been released. However, the initial Basis participant will be rewarded with the token:

• The initial LP that provides assets for the Base loan will receive tokens
• BAS holders will receive an airdrop in the form of Base loan tokens

Apart from that, there are two other very important details: First, BAS is still the governance token of the entire Base ecosystem, including Basis lending; second, a portion of the Base lending proceeds will be sent to the CDF, which provides the initial BAS capture value.

Base lending is the first step in the Base ecosystem

Base Loans provide a landing scenario for assets in the Base system, and can increase their level of capital utilization in the early stages, which can attract more early gold diggers, lock in more assets, and get more time for their ecological development.

Of course, with the development of Basis loans, this can be extended to more assets in the next period, and Basis's internal ecological assets (BAC tokens, BAS, BAB, BAC / DAI LP, BAS / DAI LP tokens) and more External encrypted related assets. , such as ETH, w BTC, etc., to increase their ecological resilience.

Algorithmic stablecoins have a long way to go, and it will be difficult to develop in a few years, because it requires patience and courage.