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Monday, October 25, 2021

‘Massive Test’ Faced By Dynamic Set Dollar As Stablecoin Falls

It should come as no surprise to anyone that the fate of the Dynamic Set Dollar might prove extremely important to the future of stable coins. Precisely why a very limited sect of cryptocurrency traders have been working on an experiment- whereas Bitcoin and Ethereum have already gained a lot of attention over Christmas. And this attention will be solely attributed to the price action that Ethereum and Bitcoin face. 

But before we get into that, it is important that we know what Dynamic Set Dollar actually represents. The DSD token is nothing but an algorithmic stable coin project that has been designed to bring down the USD to a ratio of 1:1 with the DSD. When the expansionary cycles are underway, most users are actually given rebased tokens that would be able to provide liquidity to the coin. 

What Seems To Be The Problem With Dynamic Set Dollar?

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Yet, Emin Gun Sirer of the Avalanche blockchain platform has spoken about the software developers of protocols similar to the Dynamic Set Dollar have been facing a highly different task. And this task is partly due to the price dump that DSD seems to be undergoing right now- most of the users need to adjust to the incentives that they are receiving. In the case of DSD, most of the holders usually end up burning their tokens for coupons- something that they can redeem within a month. 

In a massive thread on Twitter, Sirer mentioned how there was a growing disconnect between the intentions of the developers along with game theoretics- something which would lead participants to identify a price peg- just not the one that developers were thinking of.

Sirer is not alone in his fears- Ari Paul, the CIO of BlockTower Capital has also concluded that this project of Dynamic Set Dollar is simply a pump and dump. But, if they manage to do away with it in a proper, efficient way, they might just be the next big thing as a decentralized stable coin.  

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