{"id":142560,"date":"2020-12-28T03:24:20","date_gmt":"2020-12-28T00:24:20","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27\/"},"modified":"2020-12-28T03:24:20","modified_gmt":"2020-12-28T00:24:20","slug":"dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27\/","title":{"rendered":"# Dynamic Set Dollar faces \u201cmassive test\u201d as stablecoin falls as low as $.27"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2f553fe90a9\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2f553fe90a9\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27\/#Traders_tread_cautiously\" >Traders tread cautiously<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27\/#Oscillating_stability\" >Oscillating stability<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Dynamic Set Dollar faces \u201cmassive test\u201d as stablecoin falls as low as $.27 <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTIvMGRmMzE1YTYtNDcwNi00MGIyLTg4YjUtMmU4NDc1ZWE2ZjYzLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>While wild price action on Bitcoin and Ethereum have claimed the attention of most traders over the Christmas weekend, a select sect of crypto traders are following an experiment playing out in real-time that may have implications for the future of stablecoins: the fate of Dynamic Set Dollar.\u00a0<\/p>\n<p>Dynamic Set Dollar and its DSD token is an algorithmic stablecoin project designed to \u2014 eventually \u2014 track the United States Dollar on a 1-1 ratio with DSD. During expansionary cycles, such as one that led DSD as high as $3 per token last week, users are rewarded with freshly-printed \u201crebased\u201d tokens for providing liquidity. <\/p>\n<p>According to Avalanche blockchain platform founder Emin G\u00fcn Sirer, however, developers of protocols like DSD face a much tricker task during price dumps like the one DSD is currently experiencing: incentivizing users to adjust the amount of tokens in circulation. In DSD\u2019s case, holders can burn their tokens at any time for \u201ccoupons\u201d which they can redeem at any point within 30 days so long as DSD is above $1 per token \u2014 hypothetically enabling them to reap significant profit.<\/p>\n<p>\u201cThese mechanisms rely on whales who will jump in and out of the coin in order to stabilize its price around the intended target,\u201d said Sirer in an interview with Cointelegraph. \u201cAnd they implicitly assume that the whales share the exact same worldview as the coin&#8217;s designers: that the stablecoin should be worth $1. But if the whales do not share this view themselves, [\u2026] the coins can fail and break their intended peg.\u201d<\/p>\n<p>In a <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> thread on Saturday, Sirer noted that this disconnect between <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a> theoretics and developer intentions can lead participants in a protocol to identifying a Schelling point\/price peg, but not the one developers had in mind:<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">To use technical jargon, there may indeed be a Schelling point, but that point may reside somewhere other than the designer&#8217;s intended $1. Let me illustrate.<\/p>\n<p>\u2014 Emin G\u00fcn Sirer (@el33th4xor) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/el33th4xor\/status\/1343011165631344642?ref_src=twsrc%5Etfw\">December 27, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Traders_tread_cautiously\"><\/span>Traders tread cautiously<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>These dicey dynamics have led other observers, such as Ari Paul, the chief investment officer at BlockTower Capital, to conclude that the project is indistinguishable from a \u201cpump and dump.\u201d Decentralized finance (DeFi) maven Tyler Reynolds, however, believes that if DSD pulls through, it could mean that it\u2019s established itself as \u201cthe next big decentralized stablecoin.\u201d<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">These just look like pump and dumps to me\u200d\u2642\ufe0f.  Not necessarily by design, or the fault of the team, but how many Ample\u2019s do we need?  Those in early and out early make a ton of money.  By the time people buy off of influencer tweets, they\u2019re probably losing 60%+ within a month.<\/p>\n<p>\u2014 Ari Paul \u26d3\ufe0f (@AriDavidPaul) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/AriDavidPaul\/status\/1342780477564977152?ref_src=twsrc%5Etfw\">December 26, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>For Sirer, these kinds of uncertainties are to be expected \u2014 and traders need to take them into account.\u00a0<\/p>\n<p>\u201cBecause the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/sciencee\/\" data-internallinksmanager029f6b8e52c=\"5\" title=\"Science\" target=\"_blank\" rel=\"noopener\">science<\/a> behind these experiments is not yet well-established, there is considerable risk and traders need to carry out their own research,\u201d he said. \u201cPersonally, I look for three critical components: uses for the stable coin beyond just speculation; an incentive mechanism that offers realistic, modest yields during periods of stability; and a dedicated, well-capitalized, and competent team behind the coin.\u201d<\/p>\n<p>So far, the market seems to think Dynamic Set Dollar clears the bar. After hitting a low of $.27 earlier today, DSD has been climbing steadily and sits at $.63 at press time. Moreover, intrepid block explorers have noticed significant on-chain volumes indicating that whales are indeed buying and burning DSD for coupons:<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">789k <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/search?q=%24DSD&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$DSD<\/a> spent on coupons<br \/>what a chad<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/aVJan57lgt\">https:\/\/t.co\/aVJan57lgt<\/a><\/p>\n<p>\u2014 Eden Au (@au_eden) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/au_eden\/status\/1343239134899560448?ref_src=twsrc%5Etfw\">December 27, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Oscillating_stability\"><\/span>Oscillating stability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Still, Sirer warms that even if DSD recovers, it could be subject to future gut-punch dumps.\u00a0<\/p>\n<p>\u201cAlgorithmic stablecoins all incorporate feedback loops designed to dampen oscillations around the targeted peg value,\u201d he said. \u201cThey seem to do best when they are trading close to the target peg, and not so well when they diverge. A coin that veers into dangerous territory and then recovers might very well be subject to similar oscillations in the future.\u201d<\/p>\n<p>Aside from price action and traders\u2019 fortunes, however, Sirer says these experiments are also key to pushing DeFi forward. Sirer points to MakerDAO, Balancer, DyDx and Uniswap as previous algorithmic experiments that have become \u201cgenuinely useful instruments that provide critical functionality.\u201d<\/p>\n<p>And in the end, as the science gets better, projects like DSD will eventually achieve long-term viability, he concluded. <\/p>\n<blockquote><p>\u201cAlgorithmic stablecoins are here to stay.\u201d<\/p><\/blockquote>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/dynamic-set-dollar-faces-massive-test-as-stablecoin-falls-as-low-as-27\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Dynamic Set Dollar faces \u201cmassive test\u201d as stablecoin falls as low as $.27 &#8221; While wild price action on Bitcoin and Ethereum have claimed the attention of most traders over the Christmas weekend, a select sect of crypto traders are following an experiment playing out in real-time that may have implications for the future&#8230;<\/p>\n","protected":false},"author":1,"featured_media":142561,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-12\/0df315a6-4706-40b2-88b5-2e8475ea6f63.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74868,74891,75493,71407],"class_list":["post-142560","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-defi","tag-ethereum","tag-stablecoin","tag-trading"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/142560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=142560"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/142560\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/142561"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=142560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=142560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=142560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}