I am researching about the risks and problems of algorithmic stablecoins. As I know, it controls the supply without the need for reserves. Is it possible to develop a new algorithm to handle this problem(Depeg) and create a new algorithmic stable coin?
The way algorithmic stablecoin gets pegged is because of the other form of token/coin that goes along with the stablecoin, a dependent relationship between those tokens. The problem is if there is no incentive, at the whole level, of that coin it will lose its peg. The hard question is how to empower the main token, given its fragile state (a single main utilization for the main token and the fallibility system of the algorithm).
What backed the main token value, noting that the true algorithmic stablecoin shouldn't have any reserves? Because that is one of many reasons it got depegged.