How do current stablecoin projects advance past work?

[griggah]

I recently read the whitepapers of both Basecoin and MakerDAO as well as past work on stablecoins (bitshares and seignorage shares). If it is true that they can create a stablecoin, then I think we can all agree that this is of value. I see these both as interesting economic experiments and I wanted to discuss them in that light. In particular, basecoin sounds quite similar to seignorage shares and makerdao sounds like a much more complex version of bitshares. This is not necessarily a criticism -- these are all experiments and the scientific method says we should make small changes to past experiments to better understand reality.

With that framework in mind, what I want to discuss is a few things:
(1) To what extent is Basecoin similar to seignorage shares? To what extent is MakerDAO similar to bitshares? What are the differences?
(2) Why did seignorage shares and bitshares succeed or fail?
(3) [Synthesizing 1 & 2] What are the key reasons to believe that the differences that Basecoin & makerdao have with past work are sufficient to solve for the problems experienced with past work?

Looking forward to hearing what you all have to say.

[EvaGC]

I'm just going to quote something from Globcoin's blog. If you feel like reviewing their ICO go ahead, but either way, their recent blog on stablecoins is actually quite good and might help you:

a smart stablecoin implies the following criteria:

A global currency, which offers stability. By stability, we understand low volatility against one or a group of national fiat currencies.

A currency that not only is stable but also acts as a store of value. That means this currency has to protect the purchasing power of its holder in the Global Economy. That also mean its performance has to be simple and rational by construction and not depend upon the effectiveness of any black-box system.

It has to be truly global and be exchangeable with all major national fiat and cryptocurrencies.

It has to be liquid i.e. it has to provide a tradable price at any moment for small or large amounts, from the equivalent of 10 dollars right up to 50 million dollars. In our vision, liquidity has to be achieved by having an elastic supply.

It has to be robust to market stress. The crypto market is volatile and there is a renewed interest for fiat-backed cryptos. Some projects promise to launch a stablecoin backed by a portfolio of cryptocurrencies and algorithmic smart contracts. However, we believe that algorithmic pegs are by nature fragile against tail-event type of scenarios (black swans) where cryptocurrency markets would undergo significant moves. At the same time, the ability to protect investors’ capital in times of significant cryptomarket volatility is the very reason why stablecoins are a necessity. To compensate for this fragility algo-pegs sometimes over-collateralize in order to create a capital cushion in case the strategy would fail to properly track the reference index. This now creates another flaw by making the algo-peg capital inefficient. Fiat-backed stablecoins do not suffer from these 2 flaws because they use a hedge with no market risk. Of course, on the other hand they create a different challenge since a true fiat hedge means being able to connect successfully with the traditional financial world.

6. It has to be 100% transparent and trustworthy. In its content; its creation; its redemption. We want Globcoin users to have the safety of a Tier 1 Bank and a regular auditing process by a recognized firm.