Proof Of Work Stablecoins

[scottppp]

Hi all,

A philosophical / product discussion to see community sentiment.

Would the Bitcoin / Proof Of Work community be interested at all in a proof of work stablecoin?

The design would be oracle free, governance free, reserve free and algorithm free, but maintain stability. It would hold independent monetary policy.

To acheive this, the monetary theory would need to break the impossible trinity, which is possible in cryptocurrency systems, only proof of work however. https://en.wikipedia.org/wiki/Impossible_trinity

Is a proof of work stablecoin that is as open as Bitcoin something that would interest the community?

Many thanks and look forward to discussion on the concept.

Scott

[goldkingcoiner]

Hi Scott. Welcome to Bitcointalk! 

Sure, the concept of a stablecoin on PoW could be very interesting, however I think most people would dismiss this idea because it would not really be stable in the first place.

How would you achieve stability? What would it be pegged to? How would it maintain a peg without intervention? Nothing about PoW alone implies stable purchasing power.

Most stablecoins are just a fiat proxy. And those that are not, are proxies of other pegged value reserves.

[proofra]

Hey,

The design would be oracle free, governance free, reserve free and algorithm free, but maintain stability. It would hold independent monetary policy.

The idea sounds good, but unfortunately only at first glance. I don't see how there can be a truly stable currency without some form of reserve, collateral, redemption mechanism, oracle and/or algorithmic stabilization.

Since you already exclude reserves, oracles, governance and algorithms, the only obvious remaining mechanisms would be collateral and/or redemption (even if both are very close to reserve). Is that what you mean, or are those excluded too? Because if they are also excluded, I don't see where the stability would come from.

As stated, the definition sounds internally contradictory. You probably have to compromise somewhere.

You can say "but real country currencies are not backed by anything!", but they are backed by more than nothing. They are backed by state power, taxation, central bank policy, legal enforcement, markets, and often some form of reserves, even if not 1:1.

If we are talking about crypto, there has to be some logic, some code. For PoW, there are nodes, consensus rules, an algorithm everyone agrees on.

The scope of "algorithm-free" should also be specified. What exactly is supposed to be algorithm-free? The peg mechanism, the monetary policy, the issuance, or the consensus mechanism? Because PoW itself is algorithmic.

Even Bitcoin is not stable. It is fair, open, decentralized, and checks many boxes, but it is not stable in price or purchasing power.

On the other side, maybe I got it wrong. If there is a real concept behind it instead of just words, I would like to hear it and discuss.

The main questions for me are:

If there is no reserve, where does the stability come from? What is backing it? What is it linked to? How do you prevent volatility? If there is no oracle, how does the system know the target price? If there is no governance, who reacts when conditions change? And what exactly is the purpose of PoW in this idea? Removing governance?