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RE: Was 64.26% the Top Bitcoin Dominance This Cycle or Not?
So basically, even it theory, it doesn't make much sense.
Thanks for the detailed explanation, learnt something new about the mechanisms of stablecoins. I didn't have a clear mental picture of algorithm stablecoins before, in that it's dual-coin tokenomics, and one of the tokens is the main token that holds the secondary token in a stable place more or less. Now, I understand better also the logic behind viewing these type of stablecoin as remotely risky, because the underlying asset can be a volatile asset with its own set of risks, depending on its own tokenomics or structure.
Is it somehow correct to say that algorithm stablecoins can also be termed as derivatives given they're derived from an underlying asset? Also, can the number of algorithmic stablecoins be larger than the number of the underlying asset it's backed on, as in, 100 HIVE and 1000 HBD?
Interesting approach. A derivative implies there is a base asset on which the derivative is built (for example, XAUUSD is a derivative for solid gold that exists and is measured in ounces, bitcoin ETF shares are derivatives for BTC, etc.).
I couldn't say the same about HBD compared to HIVE, for example. While HBD is back by HIVE, there isn't a price correlation between the two or even a MC correlation between the two, even if they share MC when we talk about the virtual supply.
This happened in the case of Terra Luna (with their coins Luna and USDT). The MC of Luna that should have backed USDT was a fraction of the latter, which eventually led to its collapse.
For HIVE, this scenario is not possible simply because if the MC of HBD becomes 30% of the MC of HIVE, all HBD print is halted, including for interest, author rewards, DHF, etc. until the debt ratio goes below 30% again. It is very likely that way before that, witnesses would lower interest rate on HBD in savings. There are other protection mechanisms in place, like the 3.5-day median price on conversions, to avoid major speculative movements in the short term that would mess with this debt ratio.
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