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Decentralized stablecoins are mathematically impossible

• quickthrower2 4y ago
  That explanation is wordy, but it is easy to see they are impossible if backed by token(s) that are backed by nothing, since those things can fall so low in value as to not have enough reserves to back the $. Regardless of reserve ratios. Although 10k ETH backing $1 would be quite safe and reduce the probability down to that of your bank going bankrupt. But having $20M in reserve to back $1 is silly. Stable coins try to buffer volatility in the volatile thing, but ironically the more volatile the thing the more likely it is to undo the stablecoin. More interesting than a stable coin would be to make a stable currency on the blockchain. To do this you would need a real and large real economy (trading goods and services) based on that currency alone. You would need a nation to adopt it. That has not yet happened with cryptocurrency.
  • proc0 4y ago
    > You would need a nation to adopt it That's what I thought until El Salvador did that, although I don't know much of the details there. Did they not really adopt it? I would guess the economy would have tanked with the recent drops.