Author: wind Lemna, Babbitt information published author's permission
Editor's note: Original text dated December 2019
Overview of stablecoins
In the upcoming 2019, if you ask about the most popular landing area, it is undoubtedly DeFi. If you ask about the leading force that attracts attention, it is undoubtedly the supervision. If you ask about the most charismatic expectations, it is undoubtedly the effectiveness of blockchain technology. If you ask the most intense circuit, it is undoubtedly stablecoin.
- MOV is officially launched, creating an ace DeFi infrastructure, making transactions everywhere
- In-depth research 丨 Lightning attacks in efficient markets
- Wuzhen Review | Cross-chain ecological stability coin "MOV" released
- Talk about MOV than the three major heads of the original chain: Fully promote the cross-chain DeFi landing, the world blockchain conference released cross-chain test network
- The MOV Federation Node is officially unveiled, and the original team revealed the destruction plan
- Dialogue MOV | DeFi2020-How to move from open application to open ecosystem?
Based on this logic, we can connect this in series to get the next evolution of the blockchain. At the moment when the blockchain is getting louder and louder, before and after the implementation of regulatory policies and regulations, the blockchain technology innovation that solves the banned development is the entire main line of development. Once everything is in place, the industry that exploded in the first place will usher in the explosion. It should be a DeFi industry with endogenous power, and a strong force in this industry should be deduced from the stablecoin track. As a disruptor in the entire digital economy, it can be as large as a country or nation, as small as an individual or an enterprise. All of them gathered in groups, demonstrating the breadth of their participation, and from the early stage of USDT's far-reaching recklessness to the future of laying a stable and balanced state, there will always be pressure from multiple forces to strike, which precisely reflects The length of the time front to participate in the power game. Taken together, we know that the competition for stablecoins is so powerful and fierce. However, the competition for stablecoins is so necessary.
Analyzing the role of participation today is complex. For example, there are the National Army DC / EP from the decent, the aristocrat Libra, the nobleman, the revolutionary USDT from the ranks, and the daring swordsman Dai. Such extraordinary characters are all leaders and heroes, and have their own unique secrets, but it is undeniable that regardless of their origin, they will play in the same arena. By observing the development trajectory of stablecoins, you can generally see the evolution of digital currencies in the Spring and Autumn and Warring States Periods. With insight into the development process of stablecoins, you can most likely touch the complete development history of the digital economy.
Regardless of the DC / EP that is on the verge of abandonment, aside from Libra, who is alive and dead, forgetting the USDT at noon, and also Dai, who is not so fast, Feng Qingping is thinking about a problem. If the private currency advocated by Hayek really has a chance to stand out, what is the appearance of this currency? What strategy will you use to win? Of course, the originator's BTC positioning has been changed, from digital currency to digital gold. With the development and evolution of the second-tier network, such as the Lightning Network protocol, it is unknown whether it can return to the payment track, so for the time being, we will discuss Another possibility.
Excluding the authority of the National Army to dismantle the fence through its sovereign power, the nobility with rich resource endowment, and the background of taking the lead to win first-mover advantage, focusing this possibility on the free competition proposed by Hayek.
If we can make unremitting efforts, clever game strategies, and complete tactical plans, we can secure a seat in the end of stablecoins. Well, this stablecoin is what we are talking about. If stablecoin wants to create this kind of prospect, how to make a choice, this article intends to discuss the case. In this article, Feng Qingping only uses the stable currency MOV in the Bytom network for comparison.
MOV case study
Before comparing, let's first understand MOV. According to the original words of the project ’s white paper "MOV Stable Financial System": "Propose a stable currency financial system based on the MOV cross-chain ecology. From the perspective of basic economic principles and the construction of MOV infrastructure, develop a diversified collateral framework. Build a complete stability mechanism and clearing system, introduce the concept of risk bonds, and comprehensively build a new vision of on-chain modern finance and multilateral trade based on traditional financial field risk control models and theories. "
To understand the MOV cross-chain ecology, you need to understand the complete positioning and logic of Bytom. This is to use Bytom as the bottom layer to establish security protection. It provides a blockchain open platform, a main multi-sided BUTXO model BaaS platform, and a series of components to help set up a second-tier side chain to meet usage requirements, such as the Vapor side chain set up by the project side. There are more side chains, and naturally, cross-chains are needed. Together, they also meet the cross-chain requirements with other external chains. A next-generation decentralized cross-chain Layer 2 value exchange protocol based on the Bystack main-side chain architecture was introduced. (Magnet), decentralized cross-chain gateway (OFMF), and Layer 2 high-speed side chain (Vapor) are composed of three core modules. They are committed to building a heterogeneous and integrated diversified asset value exchange and collaboration ecosystem. MOV also uses the above three cores. The first letter of the module is combined.
Therefore, the term MOV in its ecosystem not only represents the next generation of decentralized cross-chain Layer 2 value exchange protocols, but also represents a stable financial ecosystem in the Bytom system, and also represents a stable coin financial system based on the MOV cross-chain ecosystem. The unit of account is stablecoin. This article refers specifically to stablecoins.
In the top-level design and practice of stablecoins, there are many influencing factors. Feng Qingping focuses on the following three points.
1. Credit source
No matter how you cover it, stablecoin is essentially a currency and belongs to the financial category. The essence of finance is credit. In other words, all the work done around finance is actually a process around the construction, use, and risk protection of credit. According to the previous three exclusion logics in this article, MOV's credit construction naturally takes a different approach, a survival logic that grows from the bottom up.
Or choose the original text of its white paper, "The powerful decentralized federal gateway brings rich high-value asset liquidity to the MOV ecosystem, and a set of diversified and qualified collateral frameworks is the prerequisite and soil for the creation of stable coins. The creation of multi-level value release and liquidity leverage of discrete assets is the direct utility of stablecoin services. Establishing a unified value coupling and pricing and clearing infrastructure for ecological assets is the fundamental purpose of stablecoin construction, and it also means discovering new cross-chains. Borders, truly establishing the ecological scene of MOV's stable financial system. "
This passage indicates that MOV's credit comes from two aspects, one is a strong underlying security system framework, and the other is a set of diversified qualified collateral frameworks. In the white paper, this set of qualified collateral framework currently includes: BTC, ETH, USDT, BTM.
In the popular stablecoin collateral mechanism, there is no exception that it includes native assets on the chain, such as BTC and ETH.This is not only the self-confidence and optimism of the blockchain nativeists, but also a forward-looking and inclusive approach to assets on the chain. The adoption of USDT represents a realistic attitude. After all, the USD that USDT relies on is still the international mainstream currency.
However, Feng Qingping believes that the stable rivers and lakes ultimately need to stand in line and choose to rely on the U.S. dollar or the renminbi. This is a radio question that cannot be rid of.
As a public chain positioning Bytom, on the one hand, it actively expands domestic B-side customers, helps develop alliance chain partners, strives to enter the scope of compliance and expand mainstream influence; on the other hand, it actively enters the international public chain circuit, and lays a lot of foundation for this engineering. From this position, the selection of qualified collateral is extremely sensitive and urgent.
However, the result of this choice has actually been stated in the white paper, "The stable currency system of the digital asset world should not overstep the boundaries of its own liabilities, replace or impact the national currency payment / settlement / delivery system, but in the central bank digital currency. (DCEP)  In the early days of its birth and promotion, it played a role of assisting popularization and coordinated development. At the same time, it should continue to compete for accurate positioning in its dedicated native digital asset financial system, and develop a stable settlement of its own ecology. System, transaction medium and value store. "
The choice of MOV is to actively help expand the internationalization of RMB rather than USD, which is the route choice. It is believed that in the near future, DC / EP will not only enter the qualified collateral framework, but also continue to increase its proportion in the collateral framework. In fact, although there are many stablecoins, the number of stablecoins anchored to the RMB is too small. From this point of view, MOV is trying to closely link its destiny with the National Games. It is eager to share a share of the huge domestic demand market and also to be the leader of the international market. Such a vision and positioning have great imagination. .
2. Sources of development potential
There are so many stablecoins, indicating that it is not difficult to create a stablecoin in theory. The design of the collateral collateral system highlights the business philosophy of wool out of sheep. The problem is how to take the lead in introducing and enclosing a batch of sheep, let alone to mention It's the influx of creative flocks.
Sovereign currencies use authority to break the ground, but they will eventually face the dilemma of dividing their spheres of influence, which will hinder development and keep losing ground. As is the case with the US dollar today, this is actually a typical battle for positions. Libra has a million male teachers, everyone knows Sima Zhao's heart, and indeed he has gained a situation of group attack, which can be described as a long road. USDT relies on the power of inertia, like the dollar after the disintegration of the Bretton Woods system, but whether it can clarify the criticisms and weaknesses of the collateral of cash equivalents, trust the United States and establish a solid "oil" bundling strategy to escape the predicament. . Dai is currently conducting a DAO experiment of the new life in full swing, trying to find a weak link in the global capital market to break through, full of infinite possibilities, we pay attention to it.
The stablecoin market appears to be unstable. The key is that due to the different backgrounds they rely on, their future development potentials are very different. In the face of development problems, there are different routes, and opportunities and risks coexist.
As a folk late show, what is the development logic of MOV?
"Most of the current stablecoin projects start from the stablecoin itself and establish projects, constantly telling the story of the stability mechanism and algorithm regulation, earning short-term benefits from replacing currency issuance or participating in the lending market, and have not stood at the height of building a complete ecosystem from the beginning. I am thinking about the overall supporting facilities that stablecoin should have, which has led to inadequate infrastructure attachment, rich collateral framework, and application scenario expansion. I can't clearly define my position as a supporting loan or a transaction medium, so I ignore it. The core meaning of establishing a stable currency is the right to clear prices. "
This passage reflects the project's thinking on the positioning of MOV, and also extends the underlying logical support for gaining development potential.
"MOV will start thinking more about the design philosophy of stablecoins based on its complete ecological architecture and development blueprint, so that infrastructure can promote the construction of stablecoins, and stablecoins can push back the evolution of infrastructure, eventually forming a standard pricing unit that is widely accepted by the ecosystem. Another different point of other stablecoin projects is the incentive cycle. MOV stablecoins will fully take into account all the roles of direct and indirect participation in the stable financial system and feedback the earnings of the stable system to the ecological builders to promote the positive operation and expansion of the ecosystem. scale."
The development logic of MOV is not an air tower, but a close connection and ecological construction around Bytom. Like the relationship between finance and the entity, the development of finance serves the real economy and benefits from the development of the real economy. Pure idling must not be sustainable.
Only one scoop is taken for 3,000 yuan in weak water. The positioning of MOV only revolves around the right of clearing and pricing. It is not extended or profitable.
From this perspective, the MOV qualified collateral framework, as an open digital financial medium, is open and will not reject all currencies, including the US dollar, but will only increase the proportion of the RMB in a basket. Without breaking through the bottom line of MOV clearing and pricing rights, and not benefiting from the operation of stablecoins, then where will the rich income generated from the issuance and operation of currency spread?
The answer can be found in one of the risk claims of MOV's risk control measures, "MOV risk bonds are not a dual currency / equity system, and do not capture the minting tax caused by the issuance of equity tokens. They are also different from those issued by the central bank of the fiat currency system. The central bank bill is only a credit bond issued at a time of crisis. By absorbing liquidity to tighten supply, it achieves the purpose of "stabilizing the market". After the market picks up, it will issue additional repurchase bonds through stablecoins, supporting the repurchase policy. Benefits go back to creditors. "
If the stablecoin is not operated as a commercial project, this operation idea is undoubtedly attractive, but this requires prerequisites, that is, the loss within the bank and the bank must be supplemented, and other sources of cash flow must support the vision. After all, Maintaining market balance requires costs. Obviously, everything is for Bytom and everything for Bytom. This sentence can explain these interconnected relationships.
Although MOV bears the title of stablecoin, its ambitions are not limited to this. "The significance of MOV ecology to create stable currency based on cross-chain assets will go beyond creating a speculative asset and allow diversified mainstream assets to be folded and synthesized under the framework. Form value consensus and convergence so that an "incarnation" currency can become "stable transfer of debt supporting economic transactions", accelerate the promotion of stable coins and explore business scenarios (on-chain and entity), bringing more to cross-chain assets Credit expansion and social acceptance. "
This debt is also designed to better adapt to Bytom's real economy. Like real-world multilateral trade, if you look forward to the digital world where multiple chains coexist in the future, this incarnation currency is also intended to solve and serve future multi-chain trade. To build an inclusive and open digital economy. This should be the analysis of the different development potential sources of MOV from other pure stablecoins.
As Vice Premier Liu He pointed out in a speech at the 11th Lujiazui Forum in Shanghai, "The supply system, the demand system and the financial system are a triangular framework of interaction. This is an open environment in the context of globalization and accelerated technological change. System, not a closed system. In the process of supporting each other, China's economy has maintained a stable and healthy development. "
3. Risk management and control
Feng Qingping has always believed that in a digital economic ecosystem, the existence of stablecoins is necessarily flawed because of the lack of equilibrium to maintain ecological stability, and it is difficult to prevent cyclical risks and systemic risks. Purely using native generation Coins such as BTM are also less likely to be accepted by other links, because no one wants to be hacked. If we simply introduce external stablecoins, like the small countries in South America introduced the US dollar as their national currency, they will lack governance.
However, once a stablecoin system is established, a corresponding coordination and operation mechanism needs to be laid. Decentralized institutional arrangements are used to complete centralized management, operation, and maintenance. Among these, functional roles similar to government agencies naturally arise.
Former Federal Reserve Chairman Paul Volcker mentioned in his book, "Fortune Changes", "In the relationship between the domestic government and the market, Adam Smith demonstrated the benefits of minimal government intervention in the market. In economic relations, David Ricardo demonstrated the benefits of minimal government control of trade, while Hume demonstrated the benefits of minimal government intervention in monetary policy. "
However, it is undeniable that even Milton Friedman is not in favor of allowing economic freedom to fluctuate, even if we know that in the long run, volatility will tend to average. Because in the course of this fluctuation, it can cause unbearable harm. These risks directly affect the political stability of the real society and make the entire economic structure collapse.
A stablecoin that is rooted in the ecosystem needs a set of governance tools and systems. How does MOV do it? We briefly look for answers from the white paper.
The white paper states that "the key parameter setting and adjustment of MOV's stable financial system needs to be established under the guidance of comprehensive model theory to form a comprehensive all-weather risk measurement system based on the trinity of experience, data and models."
The distinctive risk system is the three-layer clearing system of MOV. MOV has a three-level clearing system: Level 1: market arbitrage clearing, Level 2: overall system clearing, and level 3: risky bond clearing.
"MOV's internal stability mechanism is built on the basis of risk clearing and risk bonds. It not only encourages the market to participate in the spontaneous risk response behavior of liquidation arbitrage, but also in order to reduce losses to users and resist the Black Swan incident, MOV retains the system and the official level. Risk interventions and reserve mechanisms. "
This is very similar to the current China's market economy regulatory policy. Under the premise of maintaining and gradually opening up, the power of the third hand is used to promote the cold start of the system, and the power of the market economy is used to achieve risk-free pricing to calm fluctuations and combine currencies. And fiscal and taxation tools to establish a risk prevention and control system to prevent system downside risks and periodic spiral decline risks.
In the real world, the tools to deal with financial risks mainly include fiscal and taxation means and monetary means. They can use interest rates or bonds to expand or reduce the amount of money invested, invest to expand or slow down the economic capacity of the market, and adjust the distribution system through transfer payments. balance. Most of these control measures can find corresponding shadows in the MOV system. It can be said that policy reserve tools are sufficient.
"MOV has two very critical monetary policy tools, stable rates and minimum clearing mortgage rates. They play a vital role in the robust operation of the entire system. How to accurately and scientifically predict the adjustment of these covariates to the overall system behavior The quantitative impact is also the significance and mission of this model. "
"There are four types of covariates in the entire Markov chain model: stable rates, minimum liquidation mortgage rates, types of mortgage assets (MOV is a diversified mortgage), and total loan size (or debt ceiling)."
Establishing a risk prevention and control system is the first step, and proper implementation is decisive. In the years after Keynes, the two oil crises of the 1970s, the Latin American debt crisis of 1980, the US savings and loan crisis of 1987, and the subprime crisis of 1998, and the economic depression we are now experiencing. This seems to prove that the third hand cannot eliminate financial risks, only gradually digest the risks, or reduce the amplitude of its fluctuations, or even delay the time of its outbreak. We cannot be too superstitious about macro-control, but fire prevention is still necessary .
The institutional arrangement of the MOV series fully draws on the economic governance theories and practices of the mainstream society. It is the result of deep collective thinking. It is committed to the safe and stable operation of the stable currency system, and it also brings great confidence to the participating roles in the ecology. However, this still needs to avoid the deviation caused by humanity in actual operation and prevent the unexpected incidents of gray rhino and black swan.
Through a general analysis of MOV's stable financial system, it is not difficult to draw a conclusion. Different from DC / EP, Libra, USDT, and Dai, the strategy chosen by MOV is to tightly bind its future and destiny with the underlying public chain Bytom ecosystem. The positioning of the MOV financial ecological network is the desire to establish clearing and pricing rights and nurture the ecosystem of Bytom Prosperity has helped it to become the top digital economy in the era of WanChain competition. It also hopes to obtain complementary development speed and quality from its development achievements, replacing SWIFT as the clearing and settlement network in the digital economy era, and the stablecoin MOV is trending. Become a new era's trading medium currency, just like the world's universal currency, the US dollar. "A gentleman is born with a difference, and he is good at being false." The route he chooses is to hitchhiking, go abroad, and actively integrate into the historic opportunities of the Belt and Road Initiative in the context of the opening up of the capital market in China. The overall priority is mainly to actively integrate with China's legal digital currency DC / EP, becoming a powerful force to help it defeat the enemy, and promote the internationalization of the renminbi. It also allows the Bytom ecological network and the MOV financial ecological network to move from the international renminbi. In the process of transformation, greater ecological flow and value capacity will be obtained.
Think of the original choice of Alibaba, a company in the same city that is not far away from it. Its positioning is to make the world free of difficult businesses, to reduce the threshold of doing business, and to help distributed small-scale businessmen, business owners, and craftsmen. It is more calm and smooth, benefiting from but also indirectly promoting the rapid development of domestic demand and directly increasing the flow of foreign trade. The establishment of auxiliary infrastructure, including payment, logistics, and cloud computing, is all about this strategic goal. Not only conforming to the national situation, but also meeting the needs, the launch process of this set of boxing contains the password information of Ali e-commerce king. However, today, the same goal has been achieved. Through the series of global acquisitions and cooperation actions, the giant has also extended its tentacles to the payment network based on blockchain technology.
Analyze MOV's corresponding series of materials. As a mirror, its design philosophy reflects that Bytom's ambitions can be described as not too big. "Sugar models, hug thighs." Bytom was obscured when Libra repaired the boardwalk. As a member of the stablecoin group, the development of MOV needs to be further judged by combining the progress of various supporting forces and operational risks, but its distinctive tone and distinctive underlying design philosophy show another paradigm of stablecoins. . Analyzing the design philosophy of stablecoins including MOV, Feng Qingping tried to figure out the underlying logic of stablecoins winning in the complicated and stablecoin arena. This is about the future of the digital economy and the performance of investors.
To sum up, Feng Qingping believes that if private money in Hayek's eyes seeks to make breakthrough progress, its underlying development logic should include at least the following four basic principles:
- Possess a strong third-hand strength, which is enough to promote the cold start of the project;
- Have a complete and harmonious credit system framework;
- Have complementary ecosystems to support and support each other;
- Possess risk management capabilities and upgrade evolution capabilities;