SATO (Super Algorithmic Token)：An advanced version of AMPL

As we look back to this DeFi heat, we have witnessed many wealth legends such as Uniswap’s impact on DEX and the thousand times increase of AAVE. Along with the popularity of DeFi grows, the demand of algorithm stable coin becomes massive. In June 2020, AMPL has caught our eyes along with this heat of DeFi. Algorithmic Stable Coins such as ESD & Base spring up like mushrooms and ignite the second wave of DeFi’s heat.

Frankly speaking, algorithmic stable coin is not only an implementation of Hayek’s monetary theory & policy, but also a huge revolution of currency history. By implementing the electronic currency vision of a peer-to-peer electronic cash payment system, Algorithmic Stable Coin satisfies the original definition of Bitcoin from Satoshi Nakamoto, the father of BTC. However, Algorithmic Stable Coin also bears a lot of criticism such as being suspected as another form of “Ponzi Scheme”. Let us find out if Algorithmic Stable Coin is either a revolution or a deception.

1. Why does DeFi need Algorithmic Stable Coin?

In the world of crypto, the consensus of “Cryptocurrency = Money “is not yet formed. For example, we deny BTC as an ideal medium of transaction and unit of account since the monetary value of Bitcoin fluctuates massively. Therefore, using fiat currency as value measurement becomes the basic of all our current financial activities. As a solution for cryptocurrency’s monetary value to be recognized, the stable coin is introduced into DeFi through 1: 1 anchoring with fiat currency.

Without the support of decent stable coin, the adequate trust and common view, the development of DeFi will face the ceiling eventually because the core of DeFi’s development is liquidity. Liquidity means the market’s ability of buying & selling assets without making the price of market assets’ price to fluctuate dramatically. Stable fund liquidity can not only facilitate the stability of whole economic system to provide decent amount of elasticity to the economic system, but also function features of avoiding fund risk, transaction intermediary and settling payment in the digital currency market with violent price fluctuation.

It is fair to say that stable coin carries the internal needs of blockchain industry and becomes the foundation of a prosperous crypto world.

1. How does stable coin steps into “the algorithmic path”?

The stable coin which we are mostly familiar is USDT, which follows the form of fully centralized mortgage anchoring and belongs to a centralized issuing institution. The stable coins are issued 1:1 through reserves of U.S dollars. This means each one of issued USDT has one U.S dollar as endorsement on the bank account of the issuing institution. In fact, Tether’s dollar reserve is always questioned due to the unclear mortgage asset. Everybody fears the collapse of USDT. Therefore, the USDT’s problem becomes the “Sword of Damocles “which is threatening the development of the DeFi industry.

The core idea of blockchain is decentralization. The world of DeFi must need a stable coin with endorsement from an unrealistic institution. The solutions of decentralized stable coin are created in response to the needs of times. Among these solutions, a significant representative would be DAI from MakerDAO. DAI anchors U.S dollars 1:1 through mortgage. Instead of USDT, DAI anchors ETH. It maintains the anchoring price through the built-in automatic pricing mechanism of the smart contract without going through the issuer. This decentralized mortgage anchoring mode solves the issue of centralized stable coin’s trust crisis.

At this point, the development of stable coin seems completed already. However, a huge flaw of DAI is exposed after years of market inspection. The overwhelmed mortgage model is limited based on the circulation of ETH which does not satisfy the strong market demand due to the low capital flow rate. In late period, MakerDAO introduces few centralized assets such as USDC & WBTC as mortgage in concern of market risk and demand. However, this action sacrifices some decentralized features.

Algorithm stable coin is born in response to the needs of time. Just as the name implies, algorithmic stable coin adjusts the total coin amount of the whole market based on specific algorithm. When the price of algorithmic stable coin rises above the anchoring price, the market supply of algorithmic stable coin is increased. When the price of algorithmic stable coin falls under the anchoring price, either the market supply of algorithm stable coin is decreased, or the price of algorithmic stable coin is balanced though offering arbitrage space to the market. The establishment does not anchor any realistic fiat currency, does not need stable coin mortgage, and completely relies on market will and algorithm to regulate. This is also called the elastic currency by the market. The market adjusting mechanism of algorithmic stable coin decently guarantees the credit of its mint currency and easily achieves the stability of “currency”.

Currently, stable coin and DeFi does not fit each other perfectly. DeFi’s purpose is to build a completely decentralized financial ecology without relying on any third-party institutions. Algorithmic stable coin will be the most important core stone of DeFi.

2. The battle of Algorithm Stable Coin’s paths

The academical research of algorithmic stable coin has already appeared before Algorithmic Stable Coin is born. One is < Hayek Money: The Cryptocurrency Price Stability Solution > by Ferdinando Ametrano. The other one is < A Note on Cryptocurrency Stabilisation: Seigniorage Shares > by Robert Sams. This two academical works foreshadow the battle of Algorithm Stable Coin’s paths. Hayek Money represents the single currency model while Seigniorage Shares represent the multiple currency model.

Single currency model consists only one type of currency. The inflation and the deflation in this model are both following on determined rules. Take AMPL as an example, the balance of AMPL in all wallets increases as the price of AMPLE increases above 1.05 U. S dollars. When the price of AMPL falls below 0.95 U. S dollars, the balance of AMPL in all wallets decreases.

In multiple currency model, which is another path of algorithmic stable coin. Take Basis Cash as an example. The Basis Cash system consists three categories of currencies: BAC (stable coin), BAS (stock) & BAB (bond). When the price of BAC falls below 1 U. S dollar, the user can purchase BAB bond with the price of BAC*BAC to ensure that there are enough funds to maintain the stability of BAC price. When the price of BAC rises above 1 U. S dollar, the BAB bond which user has purchased can conduct 1:1 redemption with BAC. When the price of BAC rises above 1 U. S dollar, the contract will adjust the price of BAC through redemption of the BAB bond which the user has purchased. If the price of BAC is still above 1 U. S dollar after the redemption, the contract will forge new BAC to redeem BAB as a priority and allocate them to the users at Boardroom which have BAS pledged.

Which between these two different paths of algorithm paths is better? The market has already provided answer to us. Even AMPL’s algorithm has been changed several times by the successors, it still holds the top position of algorithmic coins which is similar with where POW is ranked in the main chain. All rebase models of AMPL have successfully gone through market inspection. Looking into the causes, the unmatched simplicity of the single currency rebase model has won the battle. Additionally, the single rebase model can keep the same network share which makes it fairest algorithmic stable coin model.

In the plate of rebasing algorithmic stable coins, what other emerging algorithmic stable coin is worth discussing except AMPL? SATO is beginning to gain attention from the market as the first layer 2 version of algorithmic stable coin under single currency model. It is worthy to research that either SATO can become an advanced version of AMPL or not.

3. An advanced version of AMPL — — SATO algorithmic stable coin

Just like AMPL, SATO continues to utilize the simplistic re-basing model. The path battle between AMPL & Basis Cash has already told us that the single currency re-basing model is better than the multiple currency model which is easier to establish market consensus. Of course, it is clearly not enough to best other algorithmic stable coins with only one single currency re-basing model. Therefore, SATO algorithmic stable coin dedicates to perfect its experience, fairness & safety in purpose of the algorithmic stable coin’s civilization.

4. The core competitive advantages of SATO algorithm stable coin

l Fast transaction under the chain

It is well known that the GAS fee is up to hundreds of U. S dollars due to the congestion of ETH’s main chain. The investors can not afford such high cost of trading. The phenomenon of the trade benefit being unable to cover trade cost becomes common. Since most projects of algorithmic stable coin are concentrated on ETH’s main chain. The issue of high GAS fee has blocked participation of most investors which is hard for the investors to enjoy the benefits from investing algorithmic stable coin.

SATO algorithm stable coin adopts the plan of off chain which allow the users to experience the fastest Swap algorithmic platform with no GAS fee. This plan reduces the long period risk and the trade cost to 0 to make more users joining the heat of algorithm stable coin. Currently, SATO algorithmic stable coin is gradually migrating to State Channel of Layer 2 for trading by two steps. The Ethereum Oracle contract has already accepted the safety audit of the Auditing institution, solidified.

Step A — Extremely simplistic App+Metamask experience

There is an extremely significant problem in the heat of DeFi, which is the complexity of participation. Take myself as an example, it costs me a whole day to understand the trade procedures of Uniswap in my first experience with it. In conclusion, the current DeFi environment is not friendly to new users which obliterates the enthusiasm of these users.

SATO algorithm stable coin implements the way of “DeFi’s civilization “from SwapAll and makes SATO algorithmic stable coin the “easiest to use” algorithmic stable coin. SwapAll’s smooth application allows all users including the newbies, the seniors, and the professionals to use it efficiently with zero barrier which speeds up the civilization of algorithmic stable coin.

Step B — A start up mechanism with absolute fairness

AMPL has not implemented the concept of liquidity staking at its launching. Therefore, AMPL is launched on the exchange private placement in the form of IEO and the liquidity staking goes publicly online after 6 months from initial launching. Obviously, the balance of interest tips to early investors with private placement method of chip distribution, which is unfair to the late entries.

SATO is the first stable coin with AMPL’s algorithm and liquidity staking start-up. To let users enjoy the benefit in early period and make the game process fair, SATO immediately opens liquidity staking as soon as the inquiry is active. Additionally, SATO is the only project without reserving any private placement among all the algorithm stable coins. 0 privates placements guarantee the fairness for each investor.

It is worthy to vigilance that the all-algorithm stable coin markets are facing one same problem, which is lacking the corresponding application scenarios since algorithm stable coin only stays at the level of hype arbitrage. The value of currency is maximized only if currency is widely used in various scenarios. This biggest issue of market is expected to be solved by SATO algorithmic stable coin. The professional team behind SATO has strong development skills. SwapAll, which is their Ace product, has already gained huge success.

As a result, SwapAll provides an application scenario for SATO. SATO will become the stable coin with best liquidity on SwapAll. Additionally, SATO can provide service of debit and credit in the future. The most common application scenario for users would be to deposit SATO as a type of mortgage to extract a type of crypto currency. SATO can also become the margin of other decentralized products’ derivative. User will be able to gain the leverage long and short position of Bitcoin, ETH, and other crypto currencies.

Conclusion

According to data from DeBank, the circulation of Ethereum’s U. S stable coin has reached to 39.5 billion U. S dollars, of which USDT’s issuance was 21.4 billion, USDC was 9.6 billion, and DAI was 2.8 billion. Stable coin becomes the fastest growing filed in the world of crypto. Algorithm stable coin is heading to a new stage of development as a stable coin with brand new design mechanism.

Even though the algorithm stable coin markets are still at its infancy, the qualitative changing point will appear as algorithm stable coin is keep being widely used. Algorithm stable coin will become the core stone of DeFi as its price gradually return to stability. Simultaneously, the newborn algorithm stable coins keep bringing us surprise the publishment of innovative algorithm stable coin like SATO will accelerate the realization of Hayek’s free money market vision.

Appendix
SATO algorithmic stable coin is currently available for staking at SwapAll staking platform and trading at VirgoX trading platform.

SwapAll official website: https://swapall.io/en
VirgoX official website: https://www.virgox.com/
SATO official website: https://sato.trade/
SATO official Twitter: https://twitter.com/SatoToken