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Algorithmic asset experiments continue to entice traders & developers

As the team behind Morph.Finance can attest, developing an algorithmic stablecoin project can be every bit as frustrating and thrilling as investing in one. 

While algorithmic assets have retreated from mid-December marketcap highs, the space has nonetheless continued to attract intrepid investors and developers aiming to position themselves at the forefront of a new financial vertical — though it remains an open question if such projects will ever achieve stability.

Largely formed in the mold of defunct 2018 project Basis, algorithmic assets are designed to automatically adjust the total circulating supply of a token based on preset conditions, such as time or price. While they’re ostensibly intended to hew to a peg, such as the US dollar, containing and mitigating volatility has proven to be a notoriously difficult problem to solve.

So far these assets have remained somewhat on the fringe of decentralized finance (DeFi), with the top three projects — Empty Set Dollar, Frax, and Dynamic Set Dollar — accounting for just half a billion in marketcap between them, per Coingecko. Yet traders keep lining up to take spins at the rebase casino, and there’s ongoing development into new products like BadgerDAO’s forthcoming DIGG — a synthetic asset meant to track the price of Bitcoin. It remains new, exciting, and largely unexplored territory.

A more stable stablecoin

In an interview with Cointelegraph, the anonymous developers of Morph.Finance — formerly Dynamic.Supply — recounted their story trying to build a sustainable project in the space, a story with just as many ups and downs as an algo stablecoin chart.

“Dynamic.Supply was a simple Basis fork with modified variables, which launched in early January,” said the team. “We tried to limit whale/bot accumulation by capping the maximum number of tokens per TX during the first hour of launch, but this was unsuccessful.”

The team explained that deep-pocketed 'whale' traders ...

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