Understand Volatility of Algorithmic Stablecoin: Modeling, Verification and Empirical Analysis

An algorithmic stablecoin is a type of cryptocurrency managed by algorithms (i.e., smart contracts) to dynamically minimize the volatility its price relative specific form asset, e.g., US dollar. As stablecoins have been growing rapidly in recent years, they become much more volatile than expected. In this paper, we took deep dive into core and shared our answer two fundamental research questions, i.e., Are design? practice? Specifically, introduced an in-depth study on three popular types developed modeling framework formalize their key design protocols. Through formal verification, can identify critical conditions under which might volatile. Furthermore, performed systematic empirical analysis real transaction activities Basis Cash relate theoretical possibilities market observations. Lastly, highlighted decisions for future development stablecoins.