An up-and-coming NEO token called Alchemint is redefining stablecoins after proving its worth from a Beijing stablecoin competition. Alchemint passed the original round from the competition and it is now being sold to the final round.
The competition showcased is the Blockchain Stable Economic Model Design Competition. Being the name suggests, the case is a search for solutions to cryptocurrency’s current volatility problems. Contestants took various approaches, as per the news article:
“Requested to battle various pain points with the blockchain industry, the many ten teams incorporated their stable economic model by using a real-world use case.”
The initial competition involved ten contestants, and Alchemint was on the list of projects selected to transfer onto the final round. Alchemint’s major rival, the Ethereum-based MakerDAO, will?also go on to the next round. The successful projects will compete on the finals in Columbia in 3 months.
How Alchemint Works
Stablecoins are cryptocurrencies that make an attempt to solve crypto volatility keeping a constant price. Often, a stablecoin’s cost is ensured with collateral and reserves of assets. Tether, by way of example, is pegged towards U.S. dollar. These days it is the dominant stablecoin it is backed by a centralized reserve of USD.
This competition, however, involved stablecoins to complex economic mechanisms:
“The stable economic design ideas included excess mortgage models, mortgage market maker models that utilize futures hedges, and algorithmic bank models.”
Essentially, Alchemint has two techniques used in backing tokens. Alchemint’s SAR-B token is backed by various real assets that is aimed at institutions who wants to issue stable tokens. As explained within the AMA, “For SAR-B, the institution can make the currency/asset to [peg] to, they will [peg] to gold and oil whenever they want.”
Alchemint’s SAR-C tokens, meanwhile, must be used by individuals. In line with another announcement, the SAR-C system “will depend on blockchain assets which are mortgaged in a smart contract.” Additonally, Alchemint’s SDT token may be used as a security token: it’s going to used to pay commission fees on repaid debts.
Alchemint vs. MakerDAO
Alchemint is complex. Although it may differ from Ethereum’s MakerDAO in particular ways, both platforms do share an uncomplicated feature. There’re built all around the concept of loans, mortgages, and debts. That could be, they run using the idea that locking crypto in smart contracts are useful to produce other tokens in relation to their own value.
This feature is conceivably useful, nevertheless it’s not obvious whether MakerDAO or Alchemint stands out as the superior platform — as a minimum when it comes to this kind of contest. In the markets, MakerDAO currently ranks #31 by market cap, while Alchemint is cutting edge and has not really made its mark.