I don't really follow. Is this transaction in eth or dollars? If the former, how does the algorithm know what the exchange rate is? If the latter, how does i

I don't really follow. Is this transaction in eth or dollars? If the former, how does the algorithm know what the exchange rate is? If the latter, how does it know a USD transaction has even taken place? It sounds like you're talking about a hypothetical future in which eth is just as useful as USD, meaning that the risk in holding eth and converting it to USD is negligible, and that the contract writer doesn't have to worry about the exchange rate changing much. If so, then it seems like you're sort of solving the easy part and skipping over the hard part.