Have you looked at different schemes like djed? Which seems to have an answer to both your concerns (outside world is the influx of a deflationary asset like ada, and there is a usage fee structure in place)?
Basically, they get around the circular relationship by bringing in a third asset which turns the volatile asset holders as taking a long position, not on itself but the other (scars) asset with its independent utility and ability to hold value
So far as I see the Djed/Ada/Shen still falls exactly within the framework above. However, the "Insurer" function is mostly performed by Shen.
The system will still suffer from the same dynamics: it must be supported by outside capital, either via useful transactions or a Ponzi Scheme. Useful transactions means for purposes outside of keeping the ecosystem stable.
If the Djed/Ada/Shen ecosystem is able to gain and sustain such transactions they pass the "first gate" of stability (but not the only one). If not we should expect that over time they'll suffer a similar fate as Terra/Luna.
I believe what would sustain long term of the djed peg is the adoption (use of the Ada coin). So far the only difference to Terra/Luna I see is that COTI team will hold an over collateralized position to back the stable coin.
Have you looked at different schemes like djed? Which seems to have an answer to both your concerns (outside world is the influx of a deflationary asset like ada, and there is a usage fee structure in place)?
Basically, they get around the circular relationship by bringing in a third asset which turns the volatile asset holders as taking a long position, not on itself but the other (scars) asset with its independent utility and ability to hold value
Thanks for pointing it out Rodolfo.
So far as I see the Djed/Ada/Shen still falls exactly within the framework above. However, the "Insurer" function is mostly performed by Shen.
The system will still suffer from the same dynamics: it must be supported by outside capital, either via useful transactions or a Ponzi Scheme. Useful transactions means for purposes outside of keeping the ecosystem stable.
If the Djed/Ada/Shen ecosystem is able to gain and sustain such transactions they pass the "first gate" of stability (but not the only one). If not we should expect that over time they'll suffer a similar fate as Terra/Luna.
I completely agree with your reply.
I believe what would sustain long term of the djed peg is the adoption (use of the Ada coin). So far the only difference to Terra/Luna I see is that COTI team will hold an over collateralized position to back the stable coin.
great post and good explanation!
Thanks Pawel