There are 5 main types of usd pegging in the crypto. 2 are centralized and 3 are not. So you might be asking on why only one of the decentralized usd pegs has been successful. Well let me backtrack a little.
The two centralized system are not the best. One is the infamous tether system. Where you claim to hold usd in banks and then back them with tokens. Not the best. Another peg is just a usd symbol but you know are stuck with the exchange and can't move.
The 3 decentralized system are not bad but....
Let me talk what in the world these systems are .
Keynote I being lazy and copying and pasting from my old post :)
BitUSD
The bitUSD is a market-pegged asset on the BitShares blockchain. It is often also referred to as a smartcoin, a bitasset, or just USD in the context of blockchain assets. It can be freely traded, or transferred on the BitShares blockchain and has a face value of 1 (one) U.S. Dollar.
What makes the bitUSD worth 1 (one) U.S. Dollar?
It is important to understand that the bitUSD is an asset that is not backed by real dollar in someone's bank account. The reasons for this is trust. We cannot trust anyone to hold and secure a physical asset so that people can redeem it eventually. History has repeatedly shown: It doesn't work!
Instead, the bitUSD is backed (e.g. secured) by the BitShares core token BTS. This means that behind any bitUSD, there are x amount of BTS that cannot be touched, traded or otherwise moved. These BTS are locked in a smart contract and serve as collateral.
bitUSD are actually backed by at least 2x the amount in BTS
This was from= https://steemit.com/bitshares/@xeroc/what-makes-the-bitusd-than-nubits
As you see 1 bitusd is backed by $2 of BTS a crypto fully seen in a smart contract. No need to trust you can see it for yourself. Yes it does not mean bitusd=$1 usd it too hard to promise a value like tether 1 bitusd can be with like $0.91
Bitusd can promise it will be as close to usd a possible. With more trader now bitusd will be close to usd value :)
They are flaws through. If bts falls then technically what's backing it falls hence why a 2x is backed but there always a what if.
Read more here= https://steemit.com/bitshares/@xeroc/what-makes-the-bitusd-than-nubits
Steem dollar :)
Steem Dollars can almost always be converted to $1.00 worth of STEEM.
How is sbd maintained the $1 value by market trade or atleast that what i get from posts i read please correct me in the comments.
As @ned said in this post= https://steemit.com/steem/@jukkamic/how-can-steemit-back-the-steem-dollars-with-us-dollars-as-promised
Steem Dollars are a blockchain based contract in which the Steem blockchain has committed to buy and destroy the contract in exchange for Steem at the value of a dollar. The system does not depend on a third party to 'back' the value. The value comes from speculation (see: Steem on Bittrex.com or its market cap on coinmarketcap.com), price feeds and recurring seigniorage to reward holders of Steem Dollars.
And in the whitepaper what i got is this=
A rapid change in the value of STEEM can dramatically change the debt-to-ownership ratio. The
blockchain prevents the debt-to-ownership ratio from getting too high, by reducing the amount of STEEM
awarded through SBD conversions if the debt level were to exceed 10%. If the amount of SBD debt ever
10 of 32
exceeds 10% of the total STEEM market cap, the blockchain will automatically reduce the amount of
STEEM generated through conversions to a maximum of 10% of the market cap. This ensures that the
blockchain will never have higher than a 10% debt-to-ownership ratio.
Another way to keep the us peg=
Is through saving account. By locking your sbd in the saving account you get interest lowering the supply of sbd thus increasing supply by the laws of supply and demand.
If it goes over $1=
The primary concern of Steem feed producers is to maintain a stable one-to-one conversion between SBD and the U.S. Dollar (USD). Any time SBD is consistently trading above $1.00 USD interest payments must be stopped. In a market where 0% interest on debt still demands a premium, it is safe to say the market is willing to extend more credit than the debt the community is willing to take on. If this happens a SBD will be valued at more than $1.00 and there is little the community can do without charging negative interest rates. (pg 14, Larimer and Scott, Steem An incentivized, blockchain-based social media platform)
The problem with sbd is as you can see the witness can do very little to bring back the peg it took more than 3 months to fix it. And more people do not care about bringing back the peg
Nubits
**When demand increases, shareholders will vote to create new coins to maintain the 1:1 ratio. **When demand decreases, shareholders can vote to allow coinholders to accrue interest on their investment if they agree to “park” their coins for a set period. When demand is low, speculators may see incentive to acquire and then park their coins as a high-risk, high-reward investment should demand rise again.
NuBits will enter circulation through the NuShares voting mechanism. Unlike most cryptocurrency voting systems, NuShares operates independently of the NuBits currency.
One interesting facet of NuShares is that it allows NuShareholders to choose who will receive newly-minted coins. People can submit proposals for why they should receive the coins, and NuShareholders can choose which they deem the most worthy cause. Perhaps a developer would like funding to build a project for the NuBits protocol, or a charity wants to raise funds for a cause. They can submit their proposal, and the NuShares community can debate and decide who to distribute the coins to. Info from https://www.cryptocoinsnews.com/nubits-seeks-to-end-cryptocurrency-volatility-with-usd-peg/
******Additional Price Support Innovations aka now staking
Variable transaction fees=
The Nu network now has the ability to charge variable transaction fees for both NuBits and NuShares. Transaction fees are permanently destroyed on the Nu network, acting as a deflationary mechanism for the supply of both NuBits and NuShares.This enhancement in Nu v2.0 permits shareholders to vote to set transaction fees. Further information on the mechanics behind variable transaction fees can be found here.
NuBits burning through the sale of NuShares=
NuShareholders voted in 2015 to allow the creation of NuShares through custodial grants. This action created an additional tier of Nu liquidity to better protect the $1.00 peg. In the event of parking rates being offered for a prolonged period of time, NuShareholders can vote to create new NuShares that are sold through auction. The proceeds from this auction would then be used to purchase NBT on the open market, at which point the purchased NBT would be destroyed permanently by the custodian. The net result would be a dilution of equity value for all NuShareholders in order to reduce the outstanding supply of NBT in circulation. This price support mechanism allows NuShareholders to reduce the supply of NBT to match periods of contracting demand.
*Liquidity pools==
In 2015 NuShareholders began to establish group liquidity pools to replace the individual liquidity providers that were originally specified in the Nu white paper. Users who are willing to provide liquidity for the Nu network can be compensated at varying rates, depending on the types of liquidity provided. For more information, please visit our Liquidity Pools page.
Info from=https://nubits.com/about/price-stability
Not bad but in June 2016 NuBits had a devaluation crisis, with the price falling to 20 cents. Its rate-pegging intervention mechanism this was due to bad teamwork between nushares. Read more about it here=https://medium.com/coinforward/nubits-a-tumultuous-stablecoin-afe94cbe9df8
**And Nubits as of 4/1/2018 is 40 cent : **
There liquidity pool ran out
BitUsd has worked bc there is something backing it. All other pegged coins have nothing backing it.
But bitusd can be improved. By combining the 3 types into one a better used peg can be made.
Here my idea=
A. A token backed by some other cryptocurrency. Preferably a POS coin so the coin is ganging interest
Make the new token backed 2x worth of the POS coin That way when the prices fall the backing still relative $1. Basiclaly do a bitusd expect do it with POS.
B. Expanding on A.
The usd pegged token should have its own chain.
Using the POS coin the node of the token will each share a small % the storage to running the minter.
C. Expanding on B.
Create a type of interest payment that when the token is like less than 95 cent be given more coin in exchange for holding the supply thus decreasing the supply thus letting supply and demand happen. LIke steem saving account.
D. Expanding on C.
The nodes of the token will sell an asset that represents stake in the network. New asset will sold every Q to fund the liquidity pool. * liquidity pool is the pool to buy backs token if it falls below the $.
E. Expanding on D:
The assets holders will print more of the token if it goes over the $ peg and use the money to be put into the pool. A certain % of the profits will go to the assets holders.
F.. Expanding on E
The assets holders will set a fixed transaction fee this transaction fee will be used to fund the asset holders or to burn the tokens increasing price.
With these check and balances the USD pegged should be maintained more easily.
Yes it a way my ideas is a more decentralized version of the federal reserve.
Source: https://busy.org/@sames/decentralized-alternatives-to-tether
Idea was mine :)
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