Altcoins Talks - Cryptocurrency Forum
Further Discussions => Economics , Sociology & Politics => Topic started by: Yamane_Keto on June 20, 2024, 02:08:14 PM
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I know that this idea has been put forward a lot and some business models like LUNA succeeded in the beginning before failing dramatically, but what are the most prominent reasons for the failure of such a project? You need an on-chain market maker with two tokens, the first supported by Bitcoin and the other to balance any excess demand or vice versa by buying and selling. These two tokens and the price of Bitcoin are supposed to be stable in value
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I am not interested in any new shitcoins like Luna that can exit scam whenever they want, and fiat currencies are not that stable anyway, they are worth less every new day.
Bitcoin is already backed by big network on miners and node holders, so I don't think we need to create new assets with fake stability.
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Such reasons of failure for a project like luna can be attributed to the volatility of where the token is pegged in this case if the token is pegged to the bitcoin then this would be difficult to make the token stable
in short the major challenge in such projects is maintaining the peg so that the token does not get devalued