A 🧵 on algorithmic stablecoins & capital efficiency
A lot of algo stablecoin critics continue to feel vindicated when a new project feils.
But skeptics misunderstand nuances in how the space is evolving. Let me tell you why your life will be ruled by algo stables soon 🙃
People call algos a ponzi or claim they will never work...and even if they did work, they say "Why would I ever use a partial/no backing stablecoin when I can use 150% backed $DAI?" They don't understand that capital efficiency is for SUPPLY SIDE money, not consumer side use
From a consumer perspective, all things being exactly equal like liquidity, integrations etc..no rational actor should EVER choose to use a stablecoin that's lower collateralized than one more backed. That's obvious. Hell, give me 1000% backed $DAI. Forget the 150% collateral!
(obviously take this with a huge grain of salt as $FRAX is the only other algo coin in the @Uniswap top10. So it goes without saying I have some bias)
But as someone deep in the algo stablecoin space, I think there's important predictions to make.
Firstly, I won't comment on the $1B+ genesis ICOish raise because this is a technical/mechanism overview. I don't like to comment on speculation and the drama side of crypto.
$FEI's liquidity collateralization is an innovative idea in the algo space and deserves props. Their "PCV bonding curve+reweights" are well branded and a coherent concept in onchain monetary policy. It's economically sound, and I give major props there.
1/ In this thread, I will explain why Ampleforth (AMPL) is the biggest facepalm in crypto history, more so than even Bitconnect. I don’t mean to say AMPL is a fraud, but after this thread if VCs/backers don’t explain themselves, this will be a fiasco when shit hits the fan.
2/ As of writing, AMPL has over half a billion dollars of market cap. Trust me, I got into crypto in late 2013 and mined Dogecoin so I’m no stranger to meme value. But I’d like to set the record straight here that AMPL is just that, a meme, and serves absolutely zero use
3/ cases and never will. In fact, it is less useful than even dogecoin. Wow. First, the idea behind Ampleforth is nothing new. As far as I’m aware, AMPL’s identical design implementation was proposed in 2016 by Ferdinando Ametrano dubbed Hayek Money.