Amid the meteoric rise of decentralized finance in 2020, there was persistent interest in a class of coins popularly dubbed “algorithmic stablecoins.” Some of the more famous ones include Ampleforth (AMPL), Based, Empty Set Dollar (ESD) and Dynamic Set Dollar (DSD).
While these tokens are commonly considered algorithmic stablecoins, the teams involved have their own definitions. For MakerDAO, an algorithmic stablecoin is one that uses total supply manipulations to maintain a peg. The founders of Empty Set Dollar and Neutrino, a Waves-backed stablecoin project, believe Dai is also an algorithmic stablecoin due to its programmatic mint-and-burn mechanics. Ampleforth’s team, on the other hand, rejects the notion that its token is a stablecoin.
It is relatively clear that the assets falling under MakerDAO’s definition show little stability. For example, ESD’s all-time high and all-time low are $23.88 and $0.174, respectively, according to CoinGecko. Ampleforth’s reading shows a high of $4.07 and a low of $0.1558. By contrast, Dai’s lifetime trading