About a month ago, I wrote about Empty Set Dollar, “a fully decentralized, algorithmically self-stabilizing digital dollar.” The protocol native token is an ERC-20 called ESD, which acts as both a stabilized dollar and as a governance token. It’s been quite a ride for the growth of Empty Set Dollar’s market cap (over 272% the last 30 days), which is really the best way to measure its success. The whole Empty Set protocol is designed to bring ESD back to $1 and so the two major goals are to see ESD remain at $1 while market cap grows due to demand from those participating.
As a reminder, Empty Set Dollar is defined by these 4 mechanics found in other protocols:
- Decentralized – from the start it’s only upgradable via on-chain governance
- Self-stabilizing – using an on-chain price oracle
- Single token – ESD is both a stablecoin and a governance token
- Opt-in Supply Adjustments – With ESD, all supply expansions and contractions are incentivized and voluntary.
In my last post, I mainly focused on how one can bond ESD to the Empty Set DAO to earn more ESD during supply expansions while ESD is above $1. Those expansions every 8 hours (every epoch) can pay holders of bonded ESD as much as 2.85-3%. We just lived through an expansionary period the last 2 weeks of December.
What I didn’t cover last time is how one is also incentivized to participate in supply contractions below $1. Thankfully, one has to volunteer to participate in these contractions so it’s different from Ampleforth where we saw a death spiral of participants selling out of AMPL before their wallet balance grew smaller and smaller every day, which added more selling pressure to AMPL, creating more supply contractions and so on.
With Empty Set Dollar and a new popular fork of ESD called Dynamic Set Dollar, one can opt to purchase “coupons” which guarantee you the right to redeem for 1 ESD or 1 DSD, plus an added premium. Here’s a real example of opportunities below with ESD and DSD where one can earn a 38.33% premium with ESD coupons or 45.54% with DSD coupons.
Today, I want to focus on how to earn with the incentivized supply contraction system that helps bring ESD or DSD back to its dollar peg, but before we get started, please be aware that I’m not comparing Empty Set and Dynamic Set Dollar projects as apples to apples. Dynamic Set Dollar is inspired by Empty Set Dollar, yet aims to respond faster to market demand through more frequent epochs, extended supply caps, and a modified supply extension/contraction formula. There’s a few key differences below.
- Empty Set as epochs lasting 8 hours vs 2 hours on Dynamic Set Dollar so ideally Dynamic Set community thinks this can bring DSD back to its $1 peg faster (which has yet to be proven).
- Empty Set awards 80% of newly minted ESD to holders who have bonded their ESD and 20% to LPs of the ESD-USDC Uniswap pool who bonded their LP tokens
- Dynamic Set awards 60% of newly minted DSD to holders who have bonded their DSD and 40% to LPs of the DSD-USDC Uniswap pool who bonded their LP tokens
- Both projects have coupons which expire in 30 days (90 epochs for Empty Set vs 360 epochs for Dynamic Set, which equates to 30 days).
- If one bonds ESD to Empty Set, it requires 15 epochs to “unbond” ESD,…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
