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I've been thinking about a way hypothetical idea for a stablecoin that uses price information. If the purpose of a stablecoin is to aid transactions, why not fl

I've been thinking about a way hypothetical idea for a stablecoin that uses price information. If the purpose of a stablecoin is to aid transactions, why not flip the contract around to be transaction first? I list a couch for sale on the blockchain. And I say I will exchange it for 799 LegitCoin. And now the blockchain mints out 799 LegitCoin, and auctions them to the highest bidder. And now there is 799 sitting on the blockchain while the product is listed as available. Because there will only be a 1:1 ration of coins available to coins spendable, you eliminate the role speculation will play. There is no rational reason for the value of the coin to rise above the peg, but there will almost always be arbitrage reasons to drive up the value of the coin to the peg.

koliber 4y ago
I may be silly, but isn’t this proof of stake, where you can stake anything, including a couch?
cwkoss 4y ago
How does the blockchain know you actually have a couch? How do you prevent someone from listing their toenail clippings for $1T?
- all2 4y ago
  I had this idea, too. The problem is exactly what you have stated. Then you have "trusted" nodes that hold the physical asset in hock until someone buys it. A bank, of sorts, to hold your valuables. This bank (and its associated trust) would issue the coinage once it receives the item in question. Obviously the bank charges you for holding onto your goods (they have to make money somehow) and for the privilege of issuing you cash. Then, you have to know your banker. Can you trust Muhammid from down the street to issue your coin? Maybe. 3rd party services would pop up, telling you whether a certain issuer had defaulted on delivering some hard good. Turns out Muhammid is a stand up guy, and he delivers when people come calling. So he takes your couch and sends you 799 LegitCoin. Now Muhammid has options. He doesn't have to hold onto the couch. He has a couch that he valued at 799LC, but maybe he knows someone who would buy it for 815LC. This depends on whether the exchange is a loan or a sale. [edit] And what happens if you come back to Muhammid and he doesn't have your asset? Now you tell one of those 3rd party services. If there's a run on Bank Muhammid, and he defaults on everything, his coins are worthless. Now every coin he issued on the network is worthless. Just like small banks in the Western United States before we had the dollar. Technically speaking, that means any node on the LegitCoin network can mint a node-specific coin. The value of that coin is not locked against any other coin. This necessitates exchanges and means to evaluate the value of said coins against each other. Because of the cost of holding goods, most banks will hold high value assets; gold, land, rare goods, etc. And, because of the cost of holding those goods, only wealthier individuals will be able to trade assets for LegitCoin. [/edit] And so on. Crypto is simply reinventing existing monetary schemes. Everything old is new again.
svachalek 4y ago
If you expand this transaction to an entire economy, I think this is in the neighborhood of how a central bank works. Sora XOR is/was an attempt in this direction, where a smart contract central bank buys and sells XOR on a curve to respond to economic demand. (The price crashed before it could collateralize the curve, so afaik it's never functioned as intended)

koliber 4y ago

I may be silly, but isn’t this proof of stake, where you can stake anything, including a couch?

cwkoss 4y ago

How does the blockchain know you actually have a couch? How do you prevent someone from listing their toenail clippings for $1T?

all2 4y ago
I had this idea, too. The problem is exactly what you have stated. Then you have "trusted" nodes that hold the physical asset in hock until someone buys it. A bank, of sorts, to hold your valuables. This bank (and its associated trust) would issue the coinage once it receives the item in question. Obviously the bank charges you for holding onto your goods (they have to make money somehow) and for the privilege of issuing you cash. Then, you have to know your banker. Can you trust Muhammid from down the street to issue your coin? Maybe. 3rd party services would pop up, telling you whether a certain issuer had defaulted on delivering some hard good. Turns out Muhammid is a stand up guy, and he delivers when people come calling. So he takes your couch and sends you 799 LegitCoin. Now Muhammid has options. He doesn't have to hold onto the couch. He has a couch that he valued at 799LC, but maybe he knows someone who would buy it for 815LC. This depends on whether the exchange is a loan or a sale. [edit] And what happens if you come back to Muhammid and he doesn't have your asset? Now you tell one of those 3rd party services. If there's a run on Bank Muhammid, and he defaults on everything, his coins are worthless. Now every coin he issued on the network is worthless. Just like small banks in the Western United States before we had the dollar. Technically speaking, that means any node on the LegitCoin network can mint a node-specific coin. The value of that coin is not locked against any other coin. This necessitates exchanges and means to evaluate the value of said coins against each other. Because of the cost of holding goods, most banks will hold high value assets; gold, land, rare goods, etc. And, because of the cost of holding those goods, only wealthier individuals will be able to trade assets for LegitCoin. [/edit] And so on. Crypto is simply reinventing existing monetary schemes. Everything old is new again.

svachalek 4y ago

If you expand this transaction to an entire economy, I think this is in the neighborhood of how a central bank works. Sora XOR is/was an attempt in this direction, where a smart contract central bank buys and sells XOR on a curve to respond to economic demand. (The price crashed before it could collateralize the curve, so afaik it's never functioned as intended)