Delphi Daily

Crypto trading volumes have seen a momentous shift towards stablecoins. The rise of DeFi further augmented this phenomenon, with over $245 billion of blockchain transactions settling via stablecoins in H1 2020.

While designs vary amongst different coins, one notable project, Ampleforth, attempted to change what it means to be a “stablecoin” all together. Its token, AMPL, is an algorithmic cryptocurrency that introduced the concept of rebasing. Simply put, a rebase is a mechanism where tokens are printed and issued by the protocol when the price of the token is above a certain threshold (i.e. if X-price > $1 then increase X-supply). For all intents and purposes, AMPL is not a true stablecoin despite having an explicit price target.

Before AMPL, however, the pioneer of the elastic token concept was Basis. In late 2018, Basis was shut down by the SEC for having too many security-like instruments. Basis had 3 tokens: a stablecoin whose supply was elastic, share tokens that played an equity-like role in the ecosystem, and bond tokens that represented a future claim on Basis’ stablecoin.

Empty Set Dollar (ESD) is an attempt to build an algorithmic stablecoin, borrowing a few concepts from projects like Basis. ESD has an elastic supply; new tokens are minted when the token is trading above $1.

But unlike AMPL it doesn’t mindlessly print money for token holders. Freshly printed tokens are used as an incentive to main

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