Handling Price Volatility of Gigs
Currently on Blocklancer the prices of Gigs are denominated in ETH. The high volatility of the bear market showed us that many users are continuously adapting the prices of their Gigs to fit a specific price denominated in USD.
We recognize that the USD value of cryptocurrencies will stay highly volatile for the near future, therefore we are considering to implement mechanisms that make it easier for freelancers to denominate their prices in USD.
Currently, we see 2 different approaches to achieve this. Both approaches have their advantages and disadvantages. In the following we will discuss them in detail.
(1) Managing an ETH-USD price index and adapting the ETH prices according to this index.
Description: When a freelancer creates a Gig, he/she sets a specific price in ETH. The price in USD will be calculated accordingly. For example a freelancer sets the price to be 1ETH. Imagine the current price of 1ETH = 100USD. In this case, the Gig will cost 1ETH(100USD). But now imagine that the price of ETH collapses to 50USD. Of course the freelancer still values his/her work to be worth 100USD not 50USD. Because of this the price of the Gig will adapt to 2ETH accordingly. This way the freelancers can be assured to always get the same amount of USD for their work.
Advantages:
- Payment is still done in ETH. No other cryptocurrencies or Tokens involved.
- ETH is the cryptocurrency with the 2nd highest liquidity therefore easy to acquire.
- ETH can be traded nearly on every exchange.
Disadvantages:
- ETH is still volatile and has to be exchanged for USD directly, otherwise there is still the risk of highly volatile markets.
(2) Integrating a Stablecoin like DAI
Description: All Gigs are denominated in DAI. Payment is done in DAI.
Advantages:
- The Stablecoin is always 1USD. No risk of volatility.
- No need to exchange regularly.
- Prices are always the same (no need to adapt the prices according to a certain index).
Disadvantages:
- DAI is still an experiment (see the current debate about stability fees).
- Stablecoins like Tether involve trust and are not decentralized.
- Stablecoins like GUSD can be censored and are not decentralized.
- Stablecoins cannot be traded on every exchange.
- Irritating for newcomers, because most people start with BTC or ETH.
Please let us know what you think about price volatility and let us know what is your favorite stablecoin out there.
Further reading
