Welcome to the DEBASEONOMICS LIVE AMA with The Gem Hunters we would like to thank the team for attending and sharing some information on the project!
First of all we would like to start with an introduction of what Debase actually is and what you're aiming for?
Debaseonomics is a DeFi protocol that aims to create the first truly decentralized, governable algorithmic stable coin through two assets, DEBASE, the elastic monetary token, and DEGOV, the governance token. We aim to achieve this with @jusTaPunkk's innovative architecture that allows for open-ended external stabilization through smart contracts called "stabilizer pools" (s-pools). This design can be used to overcome the problems faced by other algorithmic (and non-algorithmic) stablecoins; mainly the lack of being able to target price during negative rebase cycles and AMMs like uniswap setting the price post rebase. DEBASE is basically a stablecoin that is governed by the community. so it is decentralized and can mitigate risks of other stablecoins because all the parameters (code) is changeable and adaptable to basically all crypto / social / economic conditions depending on if the hivemind is correct or not in changing those parameters.
DEBASE is the currency, DEGOV is the gornance token that controls the currency and allows voting, the aim is to make it the most stable and adaptable stablecoin, the most decentralized too.
Has there ewven been a single decentralized stablecoin out there?
There have been attempts, i think the issue is that when you use the monetary token itself as a governance token, there is no separation of concerns between those who want to make money off the token and those who want to stabilize it. Also generally these tokens have a team allocation, there is no premine / presale with DEBASE, it was all fairly launched and could be minted with DAI, and to mind the DEGOV you need DEBASE/DAI LP. There are not mutually compatible goals necessarily.
Whats the situation regarding regulations, with it been decentralised?
Since governance is decentralized through Degov, there is no single point of failure..regulation is not really a concern. There is no jurisdiction that Debase would necessarily follow under, you can maximize regulatory arbitrage this way, Additonally, Debase is not designed to be collateralized by fiat reserves.
So whos the team behind Debase and what are their backgrounds? Sometimes there are funny anecdotes how the team got together, if you have one of those we would love to hear it?
I run icocountdown.com and have a background in computation science theoretics. I have previously helped projects like Tezos and Chainlink in their early stages. Concerning Debase, I am co-managing the project and consulting with regards to game theory. Here's some of my past work with earlier projects:
This part is actually open ended, so right now the target range is tied to DAI..however when we do collateralize it, we plan to use a basket of digital native assets instead of just DAI..so from that perspective too, there is not regulatory concerns. Also the peg can be changed, through the governance, so theoretically it can be changed from DAI to any other crypto or oracle provision, yes, both the peg, and the asset Debase is pegged to as well as stability range. We are also working on a decentralized oracle system in the future this will be deployed to stop systematic oracle failures and front running.
My background is in Academia in Computer Science (Natural Language Processing) and stochastic processes in Hydrodynamics (fluid instabilities). Debaseonomics is my first crypto project. I was an early speculator in V1; got involved more closely after we had some issues in V1to help out along with @Alexanderico. Or spoofing whatever u want to call it.
'Elastic supply' is something that gives most investors a shiver by now. Be it through constant huge rebases or just uneducated investors, it just seems like investors are often getting rekt by it. How's Debase different compared to the traditional elastic supply tokens such as Ampl? What's the difference in the supply inflation?
Elastic supply is a good concept but it can be extremely erratic, we have a system for this to smooth the curve so there is not huge changes in ranges, all these can be changed by DEGOV also, this concept is called asymmetrical lag, you can read more on the website but here is the data https://debaseonomics.io/
Debaseonomics allows for the governance to adjust the smoothing parameter (Rebase Lag) over configurable ranges that is applied in-order to dampen supply changes during a rebase. The rebase lag can be configured to behave in accordance with both the amplitude and sign of deviation between the current price and the target price thus allowing for asymmetric lag. This flexibility prevents the protocol from increasing or decreasing the supply too fast if suitable to circumstance.
For instance, say the supply needs to increase by an addition of 1000 DEBASE tokens to account for the price difference from the target price, and governance has configured a lag parameter of 20 to be applied for the supply change range of 500-1500. Here, the supply increase will dampen by a factor of 20 and to reduce the supply increase to 50 Debase only. Thus a dramatic increase in supply will not be seen.
On the other hand, if 10000 DEBASE tokens are to be added in rebase, a lower lag parameter of 5 can be used to lessen the smoothing effect on the supply change. In theory, this enforces a more dramatic supply change (and presumably, price change) relative to the previous example. essentially we smooth the curve so that rebases are not spiked too high or too low. So it allows increase and decrease in supply through the elasticity to be smoothed, this lag parameter can also be changed through the governance DEGOV protocol. Also we have a system where users call the rebase, if they do not believe a rebase is necessary they might not call it. Then we have the stabilizer pools which @anon18382 can explain more about.
Also, rebasing and elastic supply have to be differentiated..elastic supply just means supply can contract and expand, rebasing is a different concept that applies the supply change uniformly to all tokens in the ecosystem..ESD is elastic supply, but it doesn't really rebase. As for Debase, the name is misleading because sure there is rebasing, but that can be more of less removed..the main draw of the protocol is that it can be composed with any stabilization mechanisms..so for instance, we are working on a Debt purchase/redemption system which we created from scratch, so it's not a fork of anything.
Yeh the name of the project confused us, we thought it was a rebase project!
yeah it rebases, but there is alot of other added elements that helps and counteracts the rebase, so it just does rebase since price up or down, there is stabilizers on each end of it to make sure it can be concurrent with market equilibrium and as it progresses more and more are developed. Debase's goal is to find the ideal solution to stabilize a coin, and it creates a framework to incentivize this search through the mediation of governance in choosing s-pools. So you have three actors: people who propose s-pools, governance, users of Debase. You need game theory to ensure that the balance of interests led to the stabilization of the price of Debase. For instance, governance should benefit from stabilizing Debase's price (as opposed to, say, benefit from farming it to sell); the designers of s-pools should also benefit from designing efficacious pools and not be rewarded for pools that don't stabilize Debase. One way these two outcomes are incentivized is by firstly having diverse interests in governance and then having profit sharing between successful s-pool creators and governance. Many other such game-theoretical considerations were given thought to at the design state.
Simply put, the game theory of Debaseonomics should be right for Debase to succeed. For more details, check out this article: https://debaseonomics.medium.com/decentralization-composability-and-the-vision-of-debaseonomics-d632e80e61e2
this was designed to alleviate some issues with the current seigniorage tokens, but that doesn't mean Debase is a seigniorage protocol either, since we can just remove that stabilization method from the protocol through governance and compose with another..or compose this method with another method that works with seigniorage like partial collateralization
Trying to keep up with this, and wondering where do you see the benefits in your approach compared to the more common types of elastic supply / rebase tokens?
For a overview of stabilization mechanisms live, being built and planned this is a good overview: https://twitter.com/debaseonomics/status/1347197806440804352?s=20
Simply put they are not stable due to the exact thing you are asking, the elastic supply is erratic, it goes up by large amounts down by large amounts, it is extremely hard to find an equilibrium and thus it cannot be stable if it doesnt find an equilibrium, our approach is to design tools and make it so that its dynamic and can change to allow it to create an equilibrium in the supply/demand economic ratio. Also its important that stablecoins are decentralized since basically you can control a decentralized stablecoins market if you control enough of the supply. You cant really do that with the pools since there is other market forces that are engaged.
Its like @Alexanderico said..the ideal solution for algorithmic stablecoins is not known https://insights.deribit.com/market-research/stability-elasticity-and-reflexivity-a-deep-dive-into-algorithmic-stablecoins/
so to this end, it helps to have an open ended architecture which incentivizes the search for the best stabilization methods by composing with them as necessary
For example in this project the code can be changed, pools added since all the programming is modular, you can add new pools via the governance change the code via the governance, alot of stablecoins just launch with the pure code, so if there is any cybersecurity threat there could be problems, but the real issue is they cannot update them to fit economic/social environment in case of lets say a black swan event!
So you just mentioned the changes that are possible. The community has a saying on those through the DEGOV token? Why did you create another token for the governance part?
As i mentioned above there have been attempts, i think the issue is that when you use the monetary token itself as a governance token, there is no separation of concerns between those who want to make money off the token and those who want to stabilize it. In our case the governance token is not only used to vote, but once our yield generating pools go like with 88mph, we can award Degov with part of the yield during periods of stability. That way Degov holders are incentivized to stabilize Debase the model of allowing people who can maximize their investment from instability of the token in the single token doesn't make sense at all. So take the example of ESD, if you held the token and sat on governance would you act to stabilize it. Or would you act to maximize your investment, ideally those two things would be the same but in practice it's not since what you really want do with ESD is take is as high as possible to redeem your coupons which you accumulated with price suppression. This is why people talk about hoping whales will come in to rescue them and not governance, because nobody thinks governance is there to stabilize ESD.
You've just mentioned 88MPH - is that some sort of collaboration? And do you plan to collaborate with other projects in the crypto space?
Yes 88MPH is our yield layer, we both started around the same time and are each other's first partner..so we provide tvl for their pools (as of now fixed interest pool), and they provide yield that will be used to award governance during stability and create collateral for Debase. This opens up lots of questions, for one, what is that collateral ratio going to be..for another, what is the collateral going to be. So as of now, we are trying to onboard academia to work on these problems..both physicists and statisticians..the former to make good initial guesses and the former to fine tune parameters based on market behavior. Working with other protocols in DeFi is very easy..as long as you have TVL to offer, you can just build on them and they will be happy to partner..finding the braintrust to stabilize Debase not for one bull cycle but to answer questions about the stability of synthetic assets in general under various conditions is harder, hence this focus on academia.
(without name calling 🙃) We have the feeling that many of the rebase / elastic supply projects don't plan to deliver longterm. They don't have a true vision and goal for the project and they're gone just as fast as they popped up. What is your upcoming development update to look out for and your ultimate goal for Debase? Where would you like to see it heading?
The architecture of Debase itself with its open ended nature is geared towards the long term..since you can compose with different stabilization strategies..the reason it was designed this way is to find the ideal solution(s) for algorithmic stablecoins, whatever that maybe..the goal is to become the DeFi reserve because we have both the governance component to which all sorts of various DeFi interests and academia can be onboarded, apart from the monetary token itself. Since there is no team tokens or anything, the people who are still here working on Debase are people who believe in this vision. This is the best version of a complete vision statement: https://debaseonomics.medium.com/decentralization-composability-and-the-vision-of-debaseonomics-d632e80e61e2
That is an amazing vision. we've seen so many greedy teams not only making a fortune on the presale, but then also allocating a HUGE chunk of tokens to themselves!