A common issue with algorithmic stablecoins that are pegged to baskets of other cryptocurrencies is exposure to volatility in the reference assets. Stablecoin ecosystems such as OlympusDAO (DAO stands for Decentralized Autonomous Organization) have constructed a common approach to maintaining some level of price stability against that volatility. Various mechanisms enable the protocol to preserve the value of tokens, preventing them from falling below a floor.
The bear market has exposed deficiencies in the treasury management of the teams behind many of these DAOs. However, that does not discredit the concept itself. Further, our hypothesis is that backing the token with real world assets that are tied to real world supply/demand dynamics provides a firmer floor than algorithmic stablecoins whose floors are based on the value of token pairs.
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