An algorithmic stablecoin is a type of cryptocurrency managed by algorithms (i.e., smart contracts) to dynamically minimize the volatility of its price relative to a specific form of asset, e.g., US dollar. As algorithmic stablecoins have been growing rapidly in recent years, they become much more volatile than expected. In this paper, we took a deep dive into the core of algorithmic stablecoins and shared our answer to two fundamental research questions, i.e., Are algorithmic stablecoins volatile by design? Are they volatile in practice? Specifically, we introduced an in-depth study on three popular types of algorithmic stablecoins and developed a modeling framework to formalize their key design protocols. Through formal verification, the framework can identify critical conditions under which stablecoins might become volatile. Furthermore, we performed a systematic empirical analysis on real transaction activities of the Basis Cash stablecoin to relate theoretical possibilities to market observations. Lastly, we highlighted key design decisions for future development of algorithmic stablecoins.
翻译:算法稳定币是一种由算法(即智能合同)管理的一种加密货币类型,它由算法(即智能合同)管理,以动态地尽量减少其价格相对于特定资产形式(例如美元)的波动性。随着算法稳定币近年来的快速增长,它们比预期的波动性要大得多。在本文中,我们深入潜入算法稳定币的核心,并分享了我们对两个基本研究问题的答案,即:算法稳定币是否因设计而波动?它们是否在实际中变化不定?具体地说,我们开展了一项关于三种流行的算法稳定币种的深入研究,并开发了一个模型框架,以正式确定其关键设计协议。通过正式核查,这个框架可以确定稳定币种可能变得不稳定的关键条件。此外,我们对基础现金稳定币的实际交易活动进行了系统的经验分析,将理论可能性与市场观察联系起来。最后,我们强调了今后发展算法稳定币的关键设计决定。