Fear-and-Loathing based stable-money

One of the several threads I got running to solve for (half-baked):

The fiat money is backed by fear of the populous to not not use it; and loathing by the King to demand its use by fiat.

Question, is that the only way to get a non-backed stable-currency into the world? Why cant the populus make their own bread and eat it too.

Question again: Can the crypto space support a NON-backed “stablecoin” or is such only possible by the Fear and Loathing top-down and centralized?

Again: Are you not betta than this? Do you deserve more?

The real question: Okay, what is that wellspring of currency abundance that can compete with the currency creation model of fractional reserve banking money and liquidity creation model — i.e., the endless trunks of currency… we know it comes from the human work, also the network effect. But, what else… and it does seem that we are moving towards asset-based currency instead of fiat based.

(Side. Added the day after. 5/1: I realize that for the coming new, new brave new world of the mathematical, programmable smark-contracts, trustless ledgers, and where in the very foreseeable future perhaps 50% of our current cognitive exertions will be handed off to our AI agents — we need 1) new definitions for money, debt and how they are created and how different they are to the fractional reserve banking money and debt creation model, which if we take on this perspective has biased our entire culture, especially the legal construct, e.g., how its biased to the importance of money which is weird in that its just nothing but privileges granted; 2) that the crypto refers to this as liquidity is great first step… (edit to continued… ) BTW: Debt is NOT a 4 letter word — the fractional reserve system wants and will support individuals and businesses who can handle debt and will give increasing amounts and where the challenge is for them to use that opportunity and previledge to create more economic activity and greater wealth.)

How to create the currency from this:

- Alice has 1 bitcoin = $30,000
- Bob has 10 ethereum — $20,000
- Charles has Link, XRP, etc. worth about $10,000.
- Dan has a gold/certificate = $10,000. (For off-chain assets, let me say “certificate” as the trustless proof for now and yes it requires trust in the issuer — i.e., it does seem as a truism that for any and ALL real-world assets, we need custodial service for the ownership* — there is NO OTHER way for analog real-world assets, i.e. any tokenization of real-world assets will not be perfectly trustless — we CAN defray it a bit by digitizing some aspects of the assets, but cannot do it 100%: Because, nothing trustless can stand against violence and gun, why? Because any sovereign (rich or poor, honest or thevin’) can give the Italian salute against the entire universe, at any time… — ’tis the gift from the gods… that they begrudged the lowly man this gift … as payment for the entropy* they unleashed on the world… and … so, we degens… ignore that as a matter of convenience … but, it’s okay, as there are (seeming) endless horizons from where we stand as we break out from the centralized constraints. (*We have to pay for the fear and loathing…)
- Eric has Tesla stocks/certificates = $10,000.
- Frank has real estate house with $100,000 equity/certificate and $200,000 in loan.
- Larry, Mo, Kurly want to have digital (crypto?) stablecoins to use, store, spend.

Riddle: What stablecoin can be created that allows for Larry, Mo, and Kurly to have their stablecoins based on the constraints of:

1. Decentralized.
2. The stablecoin is NOT to be backed at launch, it may have to be backed “somehow” as it rolls out though (TBD).
3. None of the above assets are to be liquidated, the System protocol coin (as was LUNA) is to back all the liabilities (i.e., the outstanding stablecoins in circulation) of the system.

(1 is a given, but the seeming impossible 2 and 3… is why we get to do this.)

The (seeming) winds at our backs.

• The network effect seems to magically convert into money: Proof is Bitcoin; Ampleforth (non-backed) only its kool algorithm and protocol value proposition; and yeah… Ethereum…. Oh… wow, none of the protocol coins other than the (backed) stablecoins are backed… duh!

The biggest unsolved unquestioned elephant in the degen’s room: Then why does the stablecoins need backing?

Ed It’s because of the stability. If people think Ethereum is worth less, it suddenly is. But if people think a stablecoin is worth less, it CAN’T be worth less, which means someone has to trade for it anyway whenever anyone wants to sell it.

Michael Why cant we have stablecoin that is “indexed” to the USD without any backing. I mean the USD has no backing….< Biggest riddle and elephant in the room. Why cant the crypto space solve this.

Ed Note that USD is not completely stable either. It varies with respect to other currencies, has inflation, etc.

Michael I want to add the Ampleforth rebase to this solutioning.

Soooo that if Larry wants to dump his Mojostables… to Mo, etc. then the Mojostable will drop in price, say to 95 cents. Then what we do is reduce (the rebase) the total Mojostable supply by 5% in every wallet. Then… death spiral… ? possibly. If then, the Mojo balancer will sell the Mojoprotocol coin (“LUNA2”) at open market to buy from Larry and try to keep the Mojostable at the $1 par but, then this MojoCoin (LUNA2) drops.

This still don’t back stop the death spiral, as we don’t have the Fear and Loathing tools — only the Loving and Utility tools

Ed And from one perspective, USD is backed by many, many people with guns, who will come to your house and drag you away if you don’t pay your taxes in dollars.

Michael BTW — it dont have to be perfect protocol to launch, the market will give some love and runway to new protocols … b/c if correct, to da moon. BTW: I still dont get the point of value in Amplforth’s peg/index to the 2019 USD + CPI. The AMPL is now indexed at $1.15. Do you see use case in using their coin? (This is after several dozens of hours of studying Ampleforth, but it could be me! BTW, if a contract needs a CPI indexed pricing mechanism, couldn’t it reference an oracle which gives that tyhpe of data; for example if a lease contract asks for CPI-based annual increases, etc.)

Ed I haven’t fully understood what Ampleforth is doing, so I’m not sure whether it’s valuable.

Michael But they have like few 100 mils in market cap.

Let me put it this way: Do u see value in a crypto coin that is valued at $1.15 now, and peg will adjust as the official CPI rate each year. And the coin is not backed.

Ed Well, I personally don’t, but it’s the same way I don’t really see value in Bitcoin either, so I could easily be wrong about both in the same way.

Michael In Ethereum? You must see the value, bc it actually does something — automated contracts.

Ed I see value in the Ethereum network, but not necessarily in the Ethereum token. It seems to be way too expensive for the value provided by its transaction volume.

Michael So, extend that to computer-coin that uses the 1) mostest resilient computer network to date to store an IOU ledger …. 2) that ledger is the ‘smart contract’ and some smart people* just started to say that that ledger is actually more trustworthy (plus transaction utility, e.g., cross border) than the $1 B I have in my bank. (*Michael Saylor, Cathie Woods, etc.)

Yes… the token value may be running ahead of the revenue and adoption. And speculative. But, but but… there’s zillions more to be tokenized from the real world.. and Ethereum is one of the gates.

Its the decision to say…. I will put my $$$ on this network. Saylor is also saying he trusts it the most in the known universe and for anything else that will be in the next 100 years. And he is saying eventually, the rest of my cohorts will put their gazillions on it eventually!!! and that is why it is worth $$$. Plus, per history…. the fiat money goes thru cycles of extreme exuberation and bubble bursts.. and yes, this time it's for real! (edited)

The mostest epicist bubblest bursting debt bubble in the universe — coming to the theater near you… any day now.

I am thinking somehow. we make the Mojostable coin to be smart. So that Larry will want to keep it or even pay a tiny fee to use the smartness… but what are these smartness? (Continuation of Eth being smart.)

So maybe there can be a way to embed intrinsic value into the token (to help the network effect) …: How can we make Larry want to keep the Mojo stable — 1) maybe add more utility to it, we are in the age-of-value-added-smartness, e.g., programmable money… so, why can't stables also. 2) so that either the Mojo stables earn while he keeps it and/or it's so smart that he will pay to use it.

(To GPT4 Please analyze and critique:

GPT4:
The idea of a non-backed stablecoin or “Fear-and-Loathing based stable-money” is intriguing, but there are several challenges to consider:

1. Stability: A non-backed stablecoin would be highly susceptible to market fluctuations, as it lacks any underlying asset to anchor its value. This makes it difficult to maintain a stable value, which is a critical feature of stablecoins.
2. Trust: The trust in a non-backed stablecoin would depend entirely on the belief of its users in the value of the token. As mentioned in the text, the value of traditional fiat currencies like the USD is supported by the government and its ability to enforce taxes, while cryptocurrencies like Bitcoin gain value from the network effect and adoption. A non-backed stablecoin would need a strong network effect or utility to gain trust.
3. Utility: To make a non-backed stablecoin valuable, it should provide some utility or benefit to its users. The idea of embedding intrinsic value into the token, such as earning while holding it or offering programmable features, could increase its appeal. However, implementing such features would require complex and innovative smart contract designs.
4. Network effect: A non-backed stablecoin would heavily rely on the network effect to gain value. This means that the more people who use and accept the stablecoin, the more valuable it becomes. Achieving this would require significant marketing efforts and user adoption.
5. Regulatory challenges: Non-backed stablecoins may face regulatory scrutiny as they don’t have any collateral backing their value. This could lead to issues with authorities and potentially hinder widespread adoption.

In conclusion, the concept of a non-backed stablecoin is interesting, but it faces significant challenges in terms of stability, trust, utility, network effect, and regulatory acceptance. While it’s not impossible for such a stablecoin to succeed, it would require substantial innovation, adoption, and utility to overcome these hurdles.

Notes:
- Ampleforth + Olympus + ______ = Mojostable.