Equilibrium state for a stable coin
The self-balancing mechanism of token supply into the blockchain developing by NODR
A stable coin is a core bone of upcoming blockchain projects. It is a dream, an aim and a reason to run blockchain today. Also, any blockchain integrated into a real-world product or a technology is like a dedicated payment system implemented into the company’s economy — the cost of coins has to be supported by something, same as the value of fiat money is backed by the strength of the national economy.
In each of independent national economy, one of the key monetary factors is the overall currency supply. More money in the economy, more goods could be purchased in the same period of time. If the money supply increase without a corresponding rise of purchase transactions, the economy experience inflation — the fall of the value of the currency. In the opposite case, when the amount of money decrease, the economy fall into deflation. Nowadays it is considered, that deflation is the worst threat to a national economy, while light inflation is good. Also, central banks have specific tools to control the overall money supply — through providing liquidity (or as it’s sometimes said, “helicopter money”), and by squeezing liquidity out of the system.
Would it be possible to construct the blockchain with the crypto coin supply that could increase and decrease adjusting to the needs of the corresponding economy? How it should look like. At NODR we believe we have invented a new approach of coin supply management that reduces both the inflation and deflation risks and in a fully decentralized manner. A sort of “central bank” that is not the bank under someone’s control, but the set of transparent rules — “code is the law.”
Let’s have a look at the self-balancing mechanism of token supply into the NODR blockchain that is pretty similar to the mechanism of currency supply regulation in traditional economies. In a blockchain, its driving force is new tokens supply. Hence, another force has to be implemented to balance this process. A particular combination aimed to regulate tokens supply and burn. We are talking about a tendency to the equilibrium state.
What is an equilibrium state
When each new block of the blockchain is created, a certain number of tokens is minted, and a certain amount of tokens is burned. By comparing the number of minted tokens to the number of burned tokens, it is possible to identify a special state where the number of minted and burned tokens is equal. This is the equilibrium state.
At the equilibrium state, the overall token supply in the economy does not change. The number of tokens paid for traffic delivery depends on the price of the token. The higher the price of the token, the fewer tokens that need to be paid for delivering 1 gigabyte of traffic, and vice versa.
Imagine that the economy has been in the equilibrium state and the price of the token has increased significantly. In this case, fewer tokens are paid for the same amount of traffic. Hence, fewer tokens are burned as commission and the mint/burn balance shifts in favor of minting. Thus, new tokens are injected into the economy, which in turn should cool down the token price.
Conversely, when the price of the token drops, more tokens must be paid for the same amount of traffic, and more tokens are burned as commission. Hence, the mint/burn balance shifts in favor of burning. Thus, tokens are excluded from the economy, which means that the market experiences token scarcity and the token price should go up.
NODR approach to the equilibrium state
Imagine looking at two different blocks of the blockchain: one from the early days of the blockchain’s existence and another from a few years later. So imagine they contain the same aggregated volume of traffic recorded in the traffic delivery transactions. Due to the increasing complexity of minting, the more recent block of the blockchain should show fewer minted tokens for the same volume of delivered traffic than the initial block does. Hence, to be at the equilibrium state, the number of burned tokens would also have to be fewer in the earlier block than in the later one. If the volume of traffic delivery is the same and the number of burned tokens is smaller, then fewer tokens were paid for that traffic. This scenario could happen only if the price of the tokens grows over time.
Thus, the dual minting/burning mechanism paired with the increase of complexity to mint a token potentially introduces a growing corridor of the token price that is stabilized against heavy fluctuation. However, this mechanism does not guarantee that the Teleport blockchain will ever reach the equilibrium state or that the token price will follow a certain direction at any given time. We assume that, in the case of a well-developed market with a substantial number of independent contributors, the price of the token could come close to the indicative equilibrium.
We at NODR assume that, in the case of a well-developed market with a large number of independent players, the price of the token will come close to the indicative equilibrium.
How NODR coin may be considered as a stable coin
It is important to note that if a coin does not tent to the equilibrium state, it does not tend to become stable, so it means there is no reason for this coin to exist. NORD coin will stick to the traffic and its price, with the sales mechanism described within a blockchain.
Therefore, we claim that the value of NODR token is not a simple belief of a price rise or fall. So the holders’ fears like FOMO or FUD are not the subject to occur. Although we know how to make the token stable, we do not know the exact media traffic market price, and we do not manage the token price. It may change in the future (and this will happen for sure). All we can guarantee is that the value of the token will be equal to the market price of some kind of traffic. Which one — just look at the blockchain — everything is in there.
In conclusion, we leave a little spoiler: we aim to create an open marketplace where millions of people can install software to become the Node of NODR CDN, receiving tokens in exchange for the bandwidth. This is going to be a supply side. The demand side is on the side of Teleport Media product, NODR “big bro.” This is a P2P CDN, enhancing the live streaming by the bandwidth (supplied by the nodes) to drive the media traffic on the web (broadcasters). This is in focus indeed. We believe that the future of media content delivery is decentralized. So we at Teleport and NODR are going to show the world how live streaming evolved with CDN technical superstructures such as Teleport and the uber0like marketplace benefits enabled by NODR.
In the next articles, we are going to reveal some features of the upcoming marketplace CDN. Stay tuned!
