Money Games - The Daily Gwei #150

They're not stablecoins, okay?

As you’ve probably noticed lately there is a relatively new form of “money game” on Ethereum that people are calling “algorithmic stablecoins”. Don’t let the name fool you though - these things are anything but stable and are incredibly risky games to play if you don’t know what you’re doing (even then, it’s still very risky).

Some of the original money games that I wrote about a while ago include YAM (which has ironically just removed their rebasing mechanism) and of course Ampleforth was a very popular game during DeFi mania. Though, the new money games that we are seeing lately such as Empty Set Dollar (ESD), Dynamic Set Dollar (a fork of ESD) and now Mithril Cash (a fork of Basis Cash) are more complex than YAM or Ampleforth and add new parameters & “levels” to the games.

You can think of these games like those you would find in a casino. Basically, you have really simple games such as Roulette that are purely luck based and then you have Poker which is a much more complex game that involves luck, skill and a lot of human psychology. I’d say that YAM and Ampleforth are more like Roulette in that if you get lucky and buy at the right time (just before a positive rebase spree kicks off), you can stand to make a lot of money (though there is some skill involved too). On the other hand, the “algorithmic stablecoin” games are much more complex and are akin to Poker because you need to combine luck, skill and human psychology in order to win.

My main issue with these things has always been how they market themselves. Saying that these things are meant to be “stablecoins” is totally misleading and not reflective of reality at all. So far, none of them have actually been stable and as far as I can tell, the fun of the game (and thus interest of it) would evaporate quickly if they actually ever did become stable. So really, and I sometimes get in trouble for saying this, these things are closer to being ponzis than anything resembling a stablecoin.

In saying all of that, I’m not against these games existing and I don’t blame anyone for playing them - they’re actually really fun as long as you accept that you could lose all of your money (so basically just think of it like gambling at a casino and you’ll be fine). Though, some of these things are actually trying to be a real stablecoin and I commend the teams for pursuing that goal - whether it succeeds over the long-term or not is another thing altogether.

Have a great day everyone,
Anthony Sassano

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All information presented above is for educational purposes only and should not be taken as investment advice.