Use case: To be the decentralized version of the local currency, but also to benefit from the supply elasticity as the demand for the lxAMPL rises.
Observation: The 2019 CPI index is not very practical, for especially general use. The brilliance of Ampleforth is the supply elasticity model which uses the value proposition of the algorithmic non-backed CPI index and is relatively price stable. This model harnesses and directly converts the network effect of the Ampleforth model into higher demand and higher return for the hodlers.
A decentralized non-backed stablecoin is needed. The backed USDT, USDC, etc. are not usable as an alternative to the – nothing backed – fractional reserve banking* created fiat money model. The decentralized non-backed stablecoin is.(*Actually, it is backed: The promise of the future blood, sweat, and tears of the borrower… < the human creativity and energy, the greatest ass-et!)
The world “needs” a decentralized currency that is indexed (trying to avoid saying pegged) to the local currency of choice. (Actually, I am open to this. It may need to be officially indexed to the USD, or the dominant reserve currency of the world. And then, other currencies can have their exchange rates based on this.) And this also gives an additional value proposition as a use case, as (for now), holding the lxAMPL indexed to USD, can be a very good hedge against such as the Turkey Lira, Venezuela, and Zimbabwe – where the local user would convert out of the lxAMPL only to spend in local currency.
The question would be, could we launch a token based on this – why would be the tokenomics and how do we start this if it’s non-backed and people to trust it.
Answer and for the core mechanics: I propose to combine the OlympusDAO’s innovation to the Ampleforth innovation to start. We can do a lot more afterward.
(We add in the fractional banking strategies*, etc. as really all real value/wealth is created from human work – i.e., the FRBank creates the present value money/liquidity in exchange for the promise of the future work that leads to the creation of the then present values.) Really, the money form – whether in paper, digital, or decentralized code is NOT backed other than by work.)
Rant: inflation is not a four-letter word. It’s not the inflation that is the problem, it’s the privileged access to the liquidity, and then its uneven (unfair) dilution of value to the general public (who did not get that share of the liquidity). And Hayek’s strategy to privatize monetary policies to competing banks is too unwieldy, the world needs a single global currency governed by a decentralized platform with the Ampleforth engine at the middle layer, and for the front and the backend… TBD.
I posed to GPT4: would this work, what could be the tokenomics and how do we start this if it’s non-backed and to get people to trust it.
GPT4: (A bit of an echo chamber. I think it can be lot simpler.)
The revised proposal of combining Ampleforth’s supply elasticity model with OlympusDAO’s innovation to create a decentralized non-backed stablecoin indexed to local currencies seems interesting. Here are some thoughts on the tokenomics, trust, and how to get started with the project:
Tokenomics: By combining Ampleforth’s supply elasticity model with OlympusDAO’s approach, the stablecoin can maintain value stability relative to local currencies and provide additional benefits like yield generation. The tokenomics should involve adjusting the token supply algorithmically based on demand and the value of local currencies, as well as incorporating OlympusDAO’s mechanisms for managing the token’s value. This will require a reliable oracle system to provide accurate and up-to-date data on local currency values and demand levels for the stablecoin.
Trust: To establish trust in the decentralized stablecoin, transparency and security in the protocol design, governance, and operation are crucial. A decentralized network of validators and a clear governance model allowing for community participation in decision-making can help build trust. Regular audits and security assessments will further increase user confidence in the platform.
Launch strategy: To start the project, consider the following steps:
a. Assemble a team of experienced developers, economists, and legal experts to design the protocol, tokenomics, and governance model.
b. Develop a whitepaper detailing the project’s goals, technology, and tokenomics, and share it with the broader community for feedback and improvements.
c. Create a testnet version of the platform to allow users and developers to experiment with the stablecoin and identify potential issues before launching the mainnet.
d. Work closely with legal and regulatory experts to ensure the project complies with all relevant laws and regulations, both locally and internationally.
e. Develop a marketing and communication strategy to educate potential users about the stablecoin’s benefits and use cases.
f. Launch the mainnet version of the platform, with incentives for early adopters and liquidity providers to encourage initial adoption and growth.
The proposed decentralized non-backed stablecoin indexed to local currencies has potential, but it will face challenges related to tokenomics, trust, and adoption. By carefully planning the project’s design, launch, and growth strategy, and addressing these challenges, the project could create a viable alternative to existing stablecoins and traditional fiat currencies.
(Added: TOL - What could happen if AMPL is forked… and have both.)