How “Algorithmic” Stablecoins will Fail

Colton Robtoy
Sep 28, 2018 · 2 min read

ex: Basis, Fragments

“assorted chess piece” by Louis Hansel on Unsplash

Bank-Issued Digital Fiat leading to a Negative-Growth Stablecoin Economy; $T ‘Peg-Attacks’ by Banks.

Here is what Bank-Issued Digital Fiat is.

Here is why Banks will Issue it.

Here is how it will Lead to a Negative-Growth Stablecoin Economy.

The advent of a ‘Negative-Growth Stablecoin Economy’ (meaning the number of Users in that Stablecoin’s Ecosystem is decreasing over time) is the point at which Share Token Holders (of that Stablecoin Ecosystem) realize Game Theory tells them they need to be the first to dump all their Share Tokens on the Market, and wait for a “Positive Growth Stablecoin Economy” to re-emerge….because they don’t know if the first moment of Negative Growth is a small blip, or if it is the start of the Trend to ZERO….which means everybody could be selling their Share Tokens before them, so they should always be the first to sell.

This would be an ‘Organic Failure’ of the Algorithmic Stablecoin…..Users realize Bank-Issued Digital Fiat is a better product and use it instead of the Algorithmic Stablecoin.

Banks will also try to initiate an ‘Inorganic Failure’ of the Algorithmic Stablecoin by levying a $T ‘Peg-Attack’ against it.

Here is why Banks will do that.

Here is exactly what will happen to this Stablecoin when they do.


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