bitcoin

Design for algorithmic stablecoin backed by BTC

Rsync25

> In order to maintain the peg, we limit trades that may weaken the peg indirectly

So basically, it should be illiquid. This is a very old post about the topic.

https://medium.com/@bob.mcelrath/on-the-in-stability-of-stablecoins-517b7d17c3ee

Onchain/LN liabilities + Perpetual Futures are probably more robust than that. 

https://notgeld.medium.com/when-sats-become-the-standart-83585494f3af

This is what we have done in Valet initially. Currently, we are hedging our liabilities on the spot market. Unfortunately, perps are very KYC-ed, or otherwise, exchanges aren't liquid enough.