Algorithmic currency and its respective rebase mechanism are still hot and continue to attract the attention of the market. To understand algorithmic currency, we have to mention rebase smart contract. The process is as follows: prime is used here（ https://primematrix.io/ ）For example, when the prime price is higher than the marked price, the price will rise, the number of coins will increase, and the amount of money in investors’ wallets will increase. If the price of prime has doubled in the past 24 hours, according to the smart contract, the system will reduce the price of prime by increasing the market supply, and the money in investors’ wallets will automatically double.
At this time, investors are faced with two choices: the first is to sell the newly issued currency to recover the principal; the second is to buy more currencies in the face of the rise of currency price and the increase of currency quantity. At this time, a large number of currency holders will spontaneously recommend this currency, forming a strong fomo sentiment.
A blockchain application developer made a more understandable explanation: this principle is the common split and merger of stocks in the stock market. If a share is worth $2 and each share is given away, the share price will return to $1. On the contrary, if the stock price of 0.1 yuan is withdrawn from the market due to its low price, it can be merged into 1 share for every 10 shares, then the stock price will return to 1 yuan. In this context, the good appearance of algorithmic currency plate makes the market expect more from prime.
According to the introduction, prime adjusts the supply in the form of inflation or deflation through flexible supply agreement to achieve target price equilibrium. The function of prime protocol is to ensure that the basic market price (MP) is equal to the target price (TP), that is:
When the market price (MP) = target price (TP), prime is in equilibrium and the price completely reflects CMC
When the market price (MP) ≠ target price (TP), prime is in the interrupted state, and the price can not fully reflect CMC
When prime is in the interrupt state, rebase mechanism will be used to adjust, that is:
When MP ＞ TP, inflation (more currency)
When MP 〈 TP, deflation (less currency)
When MP = TP, there is no inflation and no deflation
Although algorithmic coin is considered by many people to be adulterated with too much fomo emotion, its endless performance also makes many people want to find out.
The overseas blockchain investor @ bill the investor divides the development of algorithmic currency into three stages:
1. Pure rebase phase, such as prime / yam
2. Simulation of US dollar bond mechanism stage, such as ESD / basis
3. In the mixed stage, partial mortgage and partial bond market regulation
What is the current stage of the market? James, the co-founder of cryptobridge capital, analyzed that: rebase is a kind of synthetic assets in essence. It simulates and anchors the operation of some valuable indicators (such as the price, market value and volatility of specific assets) through algorithms, so as to achieve the goal of synchronization with the anchored valuable indicators. At present, the typical anchor asset is US dollar, which will gradually spread to more diversified asset prices in the future, such as BTC and other public chain assets, index (S & P 500 or VIX, etc.) and even traditional assets such as US stocks.
From this point of view, this will be a large social experiment. And no matter how this social experiment will develop, what we can see is that there are more types of combination and innovation in rebase mechanism, and the whole trend is developing towards removing human factors. Maybe this is the ideal direction of Web3 in most people’s mind, and prime will be the first to lead the trend in this process!
