Enter the white paper series（3）
We start to unveil the mystery of the chainless system and introduce the relevant contents of the white paper. Many programmers have had close encounters with Bitcoin and ended up empty-handed. We are destined to meet each other and believe wealth is proportional to cognition. Our airdrop design does not require you to spend money, but you must spend time reading articles to improve your cognition and contribute to your strength; otherwise, you will miss wealth.”Comparison of the decentralized standard currency DW20 with Bitcoin, the stablecoin DAI, and the standard currency USD” is divided into four sections: the design background of DW20; its comparison with Bitcoin; its comparison with the decentralized stablecoin DAI; and its comparison with the standard currency US dollar.
Comparison of the decentralized standard currency DW20 with Bitcoin, the stablecoin DAI, and the standard currency USD
First, the Design background of DW20
DW20 is an application project of the chainless platform and is a token issued using the Bitcoin BRC20 protocol. The full text of the white paper “Realization of DW20 Decentralized Standard Currency” is 45,580 words, comprehensively describing the characteristics of DW20. Due to the large span of knowledge and the length, it isn’t easy to read. In order to facilitate the understanding of readers with different knowledge backgrounds, DW20 has a series of white papers and comments, including four simplified versions:
- The Li Xing version is for people in the coin circle.
- The Xiu Wu version is an analysis and excerpt containing most of the original views and is for people outside the coin circle.
- The Shi Guangrong and Lu Bo editions are aimed at less professional readers.
Readers with less exposure to cryptocurrency can start from the Shi and Lu versions. There are also four reviews for professionals.
The interpretation of DW20 in Tang Wanchuan’s “Interpretation of the Design Features of DW20 Decentralized Currency” is an excellent supplement to this article. This article compares a particular topic, and Tang’s analysis is more comprehensive. The name of the DW20 decentralized currency came from Mr. Tang’s suggestion.
Zhang Hai’s “Interpretation of Chainless Platforms and DW20 Standard Currency” clearly explains the relationship between chainless platforms and DW20 standard currency. DW20 decentralized currency inherits the advantages of previous decentralized stablecoin projects and improves the shortcomings. The decentralized stablecoin RAI (Reflexer), which is most similar to the decentralized standard currency DW20, is called the “ideal type” of decentralized stablecoins by Vitalik. However, the price is unstable and lacks a chainless application scenario and DW20 stabilization mechanism. Its price on the Coinmarketcap website on September 24, 2023 was $2.74. RAI has been issued for over two years and has achieved less volatility than Ethereum, but whether it can become a market-recognized stablecoin remains to be seen.
Ren Leipeng’s comment – “Some Understanding of DW20 Product Design,” is a reflection from a philosophical perspective. Ms. He Bing is not a person in the coin circle. Her “Thoughts after Reading DW20” talks about her views from a financial perspective.
Decentralized stablecoins lose the competition with pegged stablecoins
The article “Looking at Cryptocurrency from 12 Head Projects” shows that stablecoins are the largest application of cryptocurrency and are also the future trend. However, pegged stablecoins like USDT cannot become a standard currency like the US dollar; an unpegged stablecoin is the “ideal type” (Vitalik’s words) and is most likely to become a standard currency. How to implement distributed standard currency; although previous attempts have been made, there has been no successful case.
The idea of a decentralized stablecoin originated in 2012 with J.R. Willett (J.R. Willet). In 2014, economist Robert Sams proposed a “Seigniorage Shares” model that maintains price stability by automatically adjusting the money supply. The basic principle is that an equity currency and a stablecoin are adjusted using algorithms. In 2014, BitShares issued the first decentralized stablecoin, BitUSD, which was supported by BitShares’ native equity token, BTS. The decentralized stablecoin DAI also followed this model. In order to survive, DAI, the leader of decentralized stablecoins, began to abandon its ideals gradually and became a profitable project relying on stablecoins. DAI is getting further away from its goal of becoming a standard currency. What are the conditions for an ideal decentralized currency?
Conditions for success of decentralized stablecoins
When it comes to decentralized currencies, Bitcoin is the typical representative. As a decentralized standard currency, it must have the essential characteristics of Bitcoin:
- Currency is generated by consensus.
- The project itself is not the profit subject.
- There is no controlling party.
In addition, there must be the pricing ruler feature of stablecoins. In addition to these four characteristics, we said in the article “Eleven, Look at Cryptocurrency from 12 Head Projects” that it is impossible for currency circle projects that do not understand finance and marketing to win the market. The above are 6 pain points. None of the currently existing decentralized stablecoins fully meet the above six pain points, which is why none of the decentralized stablecoins have become bigger and stronger. In turn, this is the most attractive opportunity in the cryptocurrency market. The key is to have the ability to solve the above pain points. DW20 relies on a chainless platform, utilizes different designs in three stages, and adopts the airdrop method to realize the triple jump of DW20 from asset currency to stable currency and then to standard currency. The innovative design of the three stages of DW20 differs from the current design of decentralized stable coins and can meet the above six “pain points” requirements.
The three stages are the asset currency (meme currency) stage, the stablecoin stage, and the standard currency stage. In order to facilitate users’ understanding, we use a comparative method to explain. In the first stage, we compare it with Bitcoin, the leader of asset coins. In the second stage, we compare it with DAI, the leader of decentralized stablecoins. In the third stage, we compare it with the leader of standard currency, the dollar.