SotN#28: Uncollateralized Stablecoins w/ Dan Elitzer (ESD, BasisCash, backed by Faith & Yield!)

Jan 6, 2021

Dan Elitzer, co-founder of Nascent and an expert in algorithmic stablecoins, dives deep into the world of uncollateralized stablecoins. They explore the 'Stablecoin Trilemma' and the limitations of traditional models. Elitzer emphasizes the importance of trust and community involvement in these financial systems. The discussion also covers the intricacies of Empty Set Dollar (ESD), its price dynamics, and innovative solutions like ESD/ETH pools to enhance stability. Tune in for a captivating journey into the future of decentralized finance!

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INSIGHT

Nascent and Uncollateralized Stablecoins

Uncollateralized stablecoins are nascent and experimental, making them a perfect fit for Dan Elitzer's expertise.
He enjoys getting involved with protocols, and his new fund Nascent reflects this.

INSIGHT

Value Proposition of Non-Collateralized Stablecoins

Non-collateralized stablecoins aim to be both bankless/decentralized and highly capital efficient.
They address the limitations of fiat and crypto-collateralized stablecoins.

INSIGHT

Backing of Uncollateralized Stablecoins

Unlike fiat or crypto-backed stablecoins, uncollateralized stablecoins are backed by faith in their mechanisms.
Their success hinges on people believing they will stay near $1.

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State of the Nation #28

Algorithmic Stablecoins, with Dan Elitzer

Dan Elitzer recently co-founded Nascent (nascent.xyz), a venture capital company that is deep into the weeds in some of the most experimental projects in the Ethereum ecosystem.

In the 2nd half of 2020, some of the coolest experimental projects have been Algorithmic, Uncollateralized Stablecoins.

These are stablecoins without dollars in a bank, or without crypto in a vault. They are completely backed by financial incentives.... and faith in those incentives.

In this episode of State of the Nation, we begin by defining the 'Stablecoin Trilemma' (https://imgur.com/a/Uj0HBL3), and discuss some of the history of stablecoins.

Then we turn to the current design philosophy behind algorithmic stablecoins, how they work, what makes them stable, and who gets the upside?

We largely discuss Empty Set Dollar (ESD, https://www.emptyset.finance/), but also discuss Basis Cash, and Ampleforth.

Tune in, to hear about this exciting emerging corner of the DeFi ecosystem!

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