The Biggest Opportunity for Sovryn: Becoming The Next Fed

Bitocracy SIP | Sovryn Improvement Proposals
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The Biggest Opportunity for Sovryn

We’ve been thinking about stablecoins wrong. Here’s why:

The government issues Treasury bonds that fluctuate in value based on interest rates, economic conditions, and time to maturity. The Fed turns this volatile asset into two products - Treasuries and USD. Treasury holders accept price volatility in exchange for yield over time. USD holders get price stability today but forfeit the yield. This time arbitrage is the core mechanism of USD’s stability - it’s backed by Treasuries, but the volatility and yield are separated into different instruments.

When we create a Bitcoin-backed stablecoin pegged to USD, we’re missing a crucial point: Bitcoin is a better treasury than US Treasuries. We’re using Bitcoin as collateral but still pegging our purchasing power to the Fed’s effectiveness and decision-making. Why do we need to peg to any fiat currency at all?

Sovryn has the opportunity to create something unprecedented - a stablecoin tied to the real economy rather than any central bank’s monetary policy. This would be the first truly objective stablecoin, maintaining constant purchasing power at perfect equilibrium - never appreciating, never depreciating. Instead, we’ve been building USD-pegged stablecoins, voluntarily tying ourselves to the Fed’s continuous debasement through money printing. This is the ultimate blunder. We’re in a unique position to compete directly with the Fed’s monetary model, yet we’ve chosen to be subservient to it.

This solves one of Bitcoin’s core adoption challenges: businesses and individuals need a medium for day-to-day transactions that maintains consistent purchasing power. Bitcoin itself is the perfect savings vehicle - it protects against its own volatility in the long term, and you can always sell some for immediate needs. But what’s missing is the bridge between Bitcoin’s long-term strength and daily economic activity.

The current DLLR, by being pegged to USD, falls into the exact same trap as every other stablecoin - it’s just creating a simulacrum of the Fed’s system rather than competing with it. We need to fundamentally redesign DLLR to break free from USD.

The new DLLR should be what fiat claims to be but isn’t - a currency with genuinely stable purchasing power. Not stable relative to USD (which itself is constantly devaluing), but stable relative to the real economy. When you hold this DLLR, you’re holding actual economic value that neither inflates nor deflates. It’s basically always adjusted for inflation.

This opens up an enormous market. Think about all the working capital businesses hold, all the operating accounts, all the short-term cash positions. Currently, these all bleed value in fiat or risk volatility in Bitcoin. A USD-pegged DLLR just continues this bleeding. But a Bitcoin-standard DLLR would offer truly stable purchasing power, free from both crypto volatility and fiat debasement.

This is how we build a parallel economy on the Bitcoin standard. By providing this stable unit of account:

  • Startups can raise capital and operate entirely in real value terms, not depreciating fiat
  • We can create a true alternative to NASDAQ where companies trade against actual economic value (MAKES OUR DEX UNIQUE)
  • Businesses can handle their entire financial stack in a currency that maintains real purchasing power and exchange between each other with no intermediaries or fees.

The key is generating real economic activity in this new DLLR. We’ll do this by creating a favorable environment for a network of businesses and financial services to emerge that operate natively in DLLR. Every business that joins increases DLLR’s utility and creates natural demand - not through artificial USD pegs, but through real economic activity.

IMO This is bigger than probably even BOS and should be considered asap.

@yago @one_digit

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Hello Tatsu,

I am in sync with relevance of a bitcoin-backed stablecoin with bitcoin as the treasury, for businesses that accepts them.

It’s essential part for a Bitcoin Economy.

But let’s take a look at the past and present on how businesses are dealing with Bitcoin.

They accepts them either directly or via a third party. If they accepts them directly, they sell it at a later date and finance their operations. If they use a third-party, it’s the same thing, but gives the cash upfront to the companies and third-party deal with the “selling later” part.

https://coingecko.com/en/public-companies-bitcoin

Now why do they do this?

One, they have to follow the rules of the country. Since the country owns the dollar and treasury, they don’t allow the businesses under the country to replace the dollar.

Two, since the country doesn’t want anything else to replace their dollar, they have built out a economy where the regular people cannot live without it, therefore the paychecks are in dollars, and for business operations they require dollars.

Dollars which are under the government shackles, where the people have to give up their control, and which constantly devalues because of how they have designed the system, making peoples hard earned money loose value indefinelty

Bitcoin offers ownership, self-soverignity and freedom from the shackles of the government, not this.

Because of this fundamental misallignment between Bitcoin and the companies, they are incompatible.

A future where they operate in Bitcoin and bitcoin-backed stable coin is not at sight.

So from the above quote the most important thing is to have businesses that accepts Bitcoin or bitcoin-backed stable coins.

So it’s not that easy to have business truly accept Bitcoin or bitcoin-backed stable coin.

For that, first we have to create a alternative economy where atleast a section of the operations can be circularly operate with just Bitcoin.

From that point, we have to build things outwards.

As previously told, the government have deep control over any registered physical companies under their land, and with that have thier people(and foreign countries, cough… cough…) accept their currency.

So our best bet to create such world will be to start with something digital.

Find a group of audience and provide them with a value that they cherish and create a economy around it.

This is the direction I can provide.

From below on it’s something I’m working on personally to acheive circular economy, with Bitcoin. So you don’t have to read it, if not interested.

Okay, so let’s get started.

What is more digital than the internet itself?

Is there some value we can provide to people who use the internet, are they facing any problems which we can solve?

My answer is yes.

In the physical space, people work hard to earn dollars for living. Dollars which are under the government shackles, where the people have to give up their control, and which constantly devalues because of how they have designed the system, making peoples hard earned money loose value indefinelty.

And then Bitcoin came offering ownership, self-soverignity and freedom from the shackles of the government.

In the digital space, there is a similar situation.

People work hard to create content, they use it to trade, communicate, express and more, they use internet daily for all kinds of purposes. All these are translated to data, which is not just content but include whatever the real meaning of data encompass. When people use the internet that we have now, they give up their data to whatever platform they are giving it to for free. These platforms take over the data and monetize it and choose to recompensate the people or not, even if they do, it will be an insignificant portion. Apart from the monetary aspect, platforms use the ownership of the data of the people to push out their agendas, silence them allow a type of selcetive-freedom and what not, all while the people who use their platforms are held hostage because of their data.

All this is because of centralized control of data by the platforms.

What if there was a way to free people from the shackles of these platform and provide ownership and self-soverignity of their data to the users? Just like how Bitcoin did it with Money.

If we can create a economy around this then it follows the fundamental principles of Bitcoin, making sure we are alligned in the core.

And what if we can build it on top of Bitcoin with emerging L2 technologies like BOS?

apparently this is already too long, so I am just going to link an AI generated document generated with hundreds of internal documents that our team have been writing for this project as the source.

I have not included any technical details in this doc, it will be out soon(cough… cough…)

Good job @tatsumaru
DLLR will be the best fit for this economy.

Who knows maybe this could be the future of internet.

Thanks.

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I appreciate the big-picture thinking and ideas. It’s stimulating and thought-provoking.

Here are some of my thoughts and concerns.

We could definitely build a bitcoin-oriented stablecoin of sorts using similar mechanisms that are used to produce standard stablecoins.

I’m not convinced there’s a significant, immediate demand for this kind of asset. Most businesses want to transact in USD because that has a tremendous network effect. This is why USD stablecoins dominate. Attempts have been made to create gold-tracking stablecoins, smoothed bitcoin-price stablecoins, and stablecoins that track an inflation-adjusted value (Nuon, Frax Price Index). None of these have really caught on.

The desire on the part of bitcoiners for USD stablecoins is often not to perpetuate the dollar but to short it. It is a speculative attack on the dollar, not an affirmation of it.

I recommend the following reading:

https://bitcoinmagazine.com/culture/decentralized-bitcoin-backed-credit

https://bitcoinmagazine.com/technical/world-needs-bitcoin-backed-stablecoins

You didn’t specify how one would track the value of the real economy to peg your proposed stablecoin. I think that’s easier said than done.

The general idea of creating tooling for a bitcoin economy is an awesome vision. But this seems like a massive project whose MVP is much larger than Sovryn.

One final concern is that the only way to create a bitcoin-collateralized stablecoin is to find people who are willing to take on bitcoin leverage in relation to the stablecoin asset. That’s easy enough with USD because many people want to be leveraged long against USD. But there will be much less demand to be leveraged long against an asset priced in terms of a moving-average price of bitcoin or something like that.

Looking forward to your further thoughts.

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In May 2021 I tried to imagine a collateralized stable in bitcoin. But not returning the value of a fiat currency or commodity. I don’t remember if I mentioned it in the discord or in the forum, but this post prompts me to share it again, not because it has value, but in case it helps the discussion in some way.

I copy the text as I sent it at the time.

"We can all agree that the most valuable thing we have is time. If we could create a “time currency” to value things we might find a way to forget the word money as we know it.

I have been imagining for some time a stable that correlates time with bitcoin. It’s too technical for me and I wouldn’t know where to start, but maybe you can find a unit of time measured in satoshis. Maybe there is a value of satoshis that correlates with a fraction of the time it takes to create all 21,000,000 bitcoins, or with computing time, or with a depreciation rate of the fiat value of a country or all countries put together, and we can calculate a kind of constant that we all associate with a value of time.

And perhaps, in that way, we can all value a product or service as multiples or parts of that stable of time expressed in satoshis, because creating that product or service took bitcoin time".

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This!

Tying Bitcoin and bitcoin-backed stable coin to real economy is not a challenge. It’s impossible. As long as the products and services available in the real economy relies on the government, there is no way that they will truly accept Bitcoin or bitcoin backed stablecoins.

An alternate digital economy, with governance system that doesn’t rely on any country but only on the ethics and rules created by its stake holders, along with products and services that can operates with just Bitcoin(circular economy) is the next step for a free and fair world.

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Previous Bitcoin-smoothed stablecoins failed not due to USD’s network effect, but because they lacked utility and clarity. They are however directionally correct. While Fedimint’s use of eCash was a step in the right direction, its Bitcoin-linked volatility prevents stable pricing of goods and services, limiting economic adoption. Forget about significant, immediate demand, think from first principles. If there’s huge demand that means someone already solved it.

Here’s what I believe is needed to make the next stable currency of the world:

  • Smoothcoin-to-USDT pair demonstrating that waiting out BTC volatility in Smoothcoin retains more value relative to USD/USDT. (This validates the stability value proposition)
  • Smoothcoin-based economies. When the Euro was introduced in 1999 it promised to unify and bring economic stability to Europe. People were fleeing from shit currencies to better currencies that were not yet inflated. Trump wants the world to use the USD but the reality is that there’s no going back to nationalism. This means that even though the UN-centric globalism failed, a new globalism will emerge and people are tired of being bullied into using USD. The BRICS currency will fail too.
    People want a new rule-based smoothcoin that’s transparent and open to everyone (no sanctions or fiscal inflation). There’s literally no more need for the USD, the EUR, the Yuan and so on. The world needs one digital gold (Bitcoin) and one digital smoothcoin based on it (Bitcoin Dollar (or BTD?)).
    Here I explain how we should create the network effects for the Bitcoin Dollar so that it doesn’t flop like previous smoothcoins:
    https://forum.sovryn.com/t/proposal-bitcoin-standard-for-corporate-treasuries-with-tokenized-business-value/

I read both articles by David Seroy, but they don’t argue much in favor of why the USD is indispensable other than “there’s demand”. I highly recommend you read the book “Crossing the Chasm” or at least watch an YouTube summary of the idea. The idea is that you don’t look for big markets to introduce a product to, you create big markets from small markets.

Right now we have the opportunity to create the coin for the early adopters and the network state enthusiasts. Bitcoin isn’t it, it’s just too volatile. Maybe it will smooth out like Gold once it accumulates enough energy and it’s hard to move by individual investors, but even then period of prosperity and rapid innovation will cause it to deflate. It’s essentially the stock of the world.

Actually I think it’s relatively easy and it’s bad economics and central bankers which are convincing us it’s not.
The most sound description of economics I’ve heard in my life is this:
“The real economy is goods and services, money is simply the accounting thereof.”

Now if Jack Mallers is correct that Money is “time and energy” this means the total value of the economy is something like:

E = K + U

  • E: Total economic value (GDP, real production value).
  • K = 1/2 mv^2: Kinetic energy, where:
    • m: Active money supply (circulating Bitcoin, for example).
    • v: Velocity of money (rate of transactions).
  • U = mgh: Potential energy, representing savings, debt, or stored value:
    • g: Economic “gravity” (constant productivity factor, akin to baseline efficiency).
    • h: Stored value potential (future utility of saved funds or unrealized investments).

Simplified Equation:

The economy’s total value can be represented as:

E = 1/2mv^2 + mgh

Or, when simplified for practical use:

E = m(v^2+gh)

Here, v^2 (velocity squared) captures the active exchange of value, while gh (savings potential) reflects future productive capacity.

Implications:

  • The total economic value is real and measurable, grounded in the finite, fixed supply of money (m). Simply speaking Bitcoin IS the value of the economy
  • Velocity (v) and potential savings (gh) dynamically adjust the economy’s value, reflecting actual goods and services.
  • No room for fiat dilution or manipulation—money’s value is tied to its proof of work and real productivity.

Here you go: physics based money and a physics based economy.

I believe this too is a function of the economy we create. The point is “don’t compete, transcend.” There will be people willing to take on more risk in the beginning, similar to how Saylor was the first, and now we’re seeing that everyone wants to abandon USD and adopt the Bitcoin standard. I think the smoothcoiners either quit too soon or simply didn’t figure out how to “cross the chasm.” We will not wait for adoption; we will create our own markets. In my other thread, I propose that Sovryn is the exact vehicle to onboard the global economy to the Bitcoin standard and then create the bitcoin NASDAQ of Bitcoin-backed companies (no other DEX will have those companies, and we will have total DEX dominance).

Cheers.