The Biggest Opportunity for Sovryn: Becoming The Next Fed

[tatsumaru]

@one_digit

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.

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/

@one_digit

I recommend the following reading:

The Path To A Bitcoin Economy: Decentralized Bitcoin-Backed Credit

BTC-Backed Stablecoins Will Be An Integral Part Of The Bitcoin Economy

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.

@one_digit

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.

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.

@one_digit

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.

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.