Chainfeeds Summary:
Algorithmic stablecoins have always been the holy grail of DeFi.
Article source:
https://www.panewslab.com/zh/articles/019c4fb7-8ab4-747e-a13f-74163cddf1ba
Article Author:
PANews
Opinion:
PANews: Vitalik's definition of "real DeFi" is built on the decoupling of risk structures. He divides algorithmic stablecoins into two categories. The first category is pure native asset collateral, where the protocol uses ETH and its derivative assets as collateral, transferring counterparty risk on the USD side to market participants and market makers, thereby completely avoiding the systemic risks of bank account freezes and centralized institution failures. The second category is highly diversified RWA collateral. Even with the introduction of real-world assets, as long as the risk of single asset failure is hedged through asset diversification and over-collateralization mechanisms, it can still be considered a significant optimization of the risk structure. If the proportion of any single RWA does not exceed the system's over-collateralization ratio, even in the event of partial default, the principal of stablecoin holders can remain safe. A more forward-looking view is that Vitalik advocates that stablecoins gradually move away from being pegged to the US dollar and shift to a unit of account based on diversified indices to reduce the risk of long-term currency devaluation and achieve a shift from "price stability" to "purchasing power stability." This means that the connotation of stablecoins is evolving from a medium of exchange to a cross-cycle store of value. In practice, USDS and Liquity represent drastically different development paths for algorithmic stablecoins. USDS, launched by Sky Protocol after the transformation of MakerDAO, achieved rapid expansion by introducing RWA assets such as government bonds and corporate bonds, reaching a market capitalization exceeding $10 billion and becoming the third-largest stablecoin. However, its reserves are comprised of nearly 60% USDC, far exceeding the overcollateralization ratio, meaning its underlying value essentially relies on another centralized stablecoin. Furthermore, the introduction of a freeze function to meet regulatory requirements has gradually deviated it from DeFi fundamentalism. In contrast, Liquity adheres to an ETH-based approach, with its LUSD/BOLD tokens entirely backed by ETH and its liquid collateralized assets, virtually eliminating human governance. Version V2, through a "user-defined interest rate" mechanism, creates a dynamic game between borrowers and depositors, avoiding token inflation subsidies while generating real yield. It also supports wstETH and rETH collateral and one-click multiplier functions, significantly improving capital efficiency. Liquity's evolution represents a crucial step in the evolution of algorithmic stablecoins from idealism to engineered pragmatism. RAI and Flatcoins represent a more radical experimental direction for algorithmic stablecoins. RAI is not pegged to any fiat currency; its price is regulated through a PID control algorithm, aiming for low volatility rather than a fixed price. When the market price deviates from the redemption price, the system incentivizes minting or buybacks by adjusting the redemption rate, theoretically building a self-stabilizing mechanism. However, long-term negative interest rates have led to a continuous decline in the value of holding the tokens, coupled with insufficient liquidity and model complexity, severely limiting user adoption. Flatcoins, on the other hand, attempt to peg to real purchasing power rather than paper currency value, using the cost of living index as a target benchmark and dynamically adjusting the face value to resist inflation. Taking Nuon as an example, it accesses inflation data through oracles and automatically adjusts the minting and burning logic so that one token always corresponds to a stable level of consumer spending power. However, this paradigm is highly dependent on oracle security and liquidity depth; the risks of data manipulation and peg failure under extreme market conditions remain significant. Flatcoins demonstrate the ultimate direction of monetary evolution but also expose profound challenges in engineering reality.
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