What are Algorithm Based Assets (ABAs)?
Algorithm Based Assets (ABAs) are Market Pegged Assets (MPAs) which utilize an algorithm to modify the price feed in a predictable and trustworthy manner.
Who can make an ABA?
Anyone can create an ABA by creating an MPA on the BTS DEX then providing a price feed script which implements your algorithm to your trusted group of price feed producers (Bitshares committee, active witnesses or a private group of trusted Bitshares users) who need to publish price feeds for the ABA multiple times per day.
What are some examples of ABAs?
HERO (production)
HERO was the first ABA in existence to be created on the Bitshares DEX, it is pegged to the USD ($) since creation of the FED + 5% a.p.r. (per year).
By increasing the price feed 5% each year, users existing HERO holdings appreciate 5% each year instead of additional HERO being issued at a rate of 5% per year.
Price feed scripts:
Want to learn more about HERO?
- Visit the "HERO" website
- Check out HERO's CryptoFresh page
- Browse the #hero sub-steemit and follow @stan on Steemit!
HERTZ (proposed)
Hertz is a Formula Based Asset (FBA) which is pegged against the USD and modified to oscillate between rising the price feed and decreasing it in a predictable manner (50% above and below the USD price feed), thus we create phases of buying and selling pressure constantly back and forth forever.
Put it this way, imagine buying HERTZ at $0.50, selling it at $1.50 for BTS, borrow HERTZ with BTS to sell at $1.50 and buying back your dept at $0.50, now do that 12 times per year.
Risk: Low buy pressure at $1.50 + $0.50 buyers settling at $1.50 = Potential global settlement during peak phase?
Potential solution: Provide dividends to those who buy at the peak?
Price feed scripts:
- Reference minimized Haskell script
- Wackou's bts-tools repo issue raised
- Xeroc's bitshares-pricefeed repo issue raised
Want to know more about HERTZ?
NEMESIS (Silly non-serious idea)
Every hero has an arch-nemesis! This brainstormed idea proposed the opposite of HERO, a token which depreciates at a rate of 5% per year in order to create an incentive to lend the token into existence and sell it at the feed price, as when the token decreases in value the debt will be lower.
Reference HERO pseudocode:
Feed_Price = ONE_USD * (1 + (0.05 * Years_since_launch))
'Nemesis' pseudocode:
//Vars
Launch_Block_Number = Block number close to 'go-live' launch of token.
DAYS_SINCE_LAUNCH = (Block_At_Time_Of_Feed_Update - Launch_Block_Number)/Blocks_In_One_Day
Feed_Price = ONE_USD/(1+(Reduction_Modifier*DAYS_SINCE_LAUNCH))
Thoughts?
Once ABAs take off, there will likely be copycat (not a bad thing) ABAs which tweak the algorithm, what do you think the maximum appreciation for a HERO clone could be? Likewise, what is the maximum amplitude and frequency that a HERTZ clone could handle?
Please do post your ideas for potential ABAs in the comments, I'd love to hear your ideas!
Best regards,
@cm-steem