While wild price action on Bitcoin and Ethereum have claimed the attention of most traders over the Christmas weekend, a select sect of crypto traders are following an experiment playing out in real-time that may have implications for the future of stablecoins: the fate of Dynamic Set Dollar.
Dynamic Set Dollar and its DSD token is an algorithmic stablecoin project designed to — eventually — track the United States Dollar on a 1-1 ratio with DSD. During expansionary cycles, such as one that led DSD as high as $3 per token last week, users are rewarded with freshly-printed “rebased” tokens for providing liquidity.
According to Avalanche blockchain platform founder Emin Gün Sirer, however, developers of protocols like DSD face a much tricker task during price dumps like the one DSD is currently experiencing: incentivizing users to adjust the amount of tokens in circulation. In DSD’s case, holders can burn their tokens at any time for “coupons” which they can redeem at…