Proposal: DyneDollar - An AI-Backed Decentralized Stablecoin for Safety and Earning Passive Income

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Hey,
This is Mo; I am one of the students of the founder track in the PBA Hong Kong. Here is a brief explanation of my idea, DyneDollar (a decentralized stablecoin). Please check the link for the litepaper of my idea; I also implemented a basic version in Solidity last year and deployed it on Polygon. For more details, you can contact me or drop your questions here. Thank you all in advance for sharing your feedback, comment, and questions with me that means a lot! Thanks in advance!

DyneDollar: An AI-Backed Decentralized Stablecoin for Safety and Earning Passive Income

https://dynedollar.ai

Hong Kong PBA Founder Track, January 2024

Abstract:

This proposal introduces DyneDollar, to the best of our knowledge, the first AI-backed decentralized stablecoin, designed to address the challenges in the current stablecoin market. Combining a diversified, decentralized basket of assets as its collateral with practical AI-supported governance and code security features. DyneDollar offers a resilient yet flexible solution to centralization issues, unpredictable market behavior, vulnerabilities, and single-asset collateral risks. Moreover, DyneDollar pays constant passive income to the users’ non-custodial wallet by smart investment in non-risky protocols. This litepaper introduces the concept of DyneDollar.

Current Challenges in Current Stablecoins:

  • Centralization and Regulatory Risks: Most popular stablecoins like Tether (USDT) and USD Coin (USDC) are centralized, exposing them to regulatory pressures and issuer-related instabilities. Centralization brings risks like censorship and the potential for issuer bankruptcy, which can undermine trust and stability.

  • Algorithmic Stablecoins’ Vulnerability: Algorithmic stablecoins, though decentralized, have shown vulnerability to confidence crises. The collapse of Terra USD (UST) is a stark example. These stablecoins can suffer from rapid devaluation if market confidence wavers, leading to significant financial losses for holders.

  • Single-Asset Collateral Risks: Many stablecoins are backed by single assets or limited types of collateral, making them susceptible to market volatility and concentration risks. This can lead to issues with maintaining their peg, especially during market downturns or specific asset devaluations.

Link to the litepaper: Litepaper-DyneDollar v1.2 - Google Docs