Coil — Elastic Supply — Ideal DeFi Collateral
Coil is an elastic supply cryptocurrency designed to be dynamic, yet predictable. This article will explain what elastic supply is and a little bit about how Coil works.
Elastic supply essentially takes the price volatility of Bitcoin and most cryptocurrencies, and instead flips this into supply volatility. Bitcoin is a scarce asset and it is predictable. You know how many Bitcoin there will ever be, and you can roughly estimate what the daily supply will be. Bitcoin is a fantastic store value. However, having a finite supply leads to a few issues. Because it is scarce, there are only so many that can circulate. This can lead to the price being very volatile, especially while it is younger. This is why it is harder for Bitcoin and other cryptocurrencies to be used as a medium of exchange or as a collateral asset. They have a hard time adapting to large supply and demand changes, therefore, many stablecoins were developed. Ampleforth saw this issue, and developed elastic supply.
Elastic supply takes the price volatility of BTC and stable supply and flips it into price stability and supply volatility. What this does is allow a better medium of exchange, as you know price will be more stable in the longer term. It also is able to adapt better to supply and demand shocks in the market. Think of elastic supply cryptocurrencies like an automated Central Bank that rebases itself automatically to the supply and demand of the market. Coil is pegged to $1 (2020 USD adjusted to CPI inflation). As demand grows and price rises over 5% of its target price, Coil automatically adjusts itself and prints more supply every 23 hours. This increases the supply of every address until it is enough for people to start spending and selling it, which leads to its price moving back to $1. If the supply is too large, and the price falls under 5% of its target price, Coil then contracts the supply and removes it from all addresses to spur demand. The Central Banks have a hard time adjusting the monetary supply quickly. When they expand or contract the monetary supply it takes many months to see the effects. However, in cryptocurrency things move much faster. Coil is able to adjust itself to the market every 23 hours. This creates a more stable unit of account for commerce, and Coil is also much less correlated to Bitcoin and other cryptocurrencies. This makes it a perfect hedge asset for all portfolios, as well as a great DeFi collateral asset.
Coil is a dynamic, yet predictable, decentralized elastic supply token redesigned to solve market manipulation and appeal to all. Coil has a built-in 23 hour rebase mechanism. The supply of Coil tokens “coil and recoil,” which adjusts to the supply and demand of the market. Although Coil is designed to coil and recoil around the target price it will also go through expansion and contraction phases just like all markets. Especially in the younger days, it will be prone to larger volatility. However, as Coil grows larger in market cap, age, supply, and liquidity it will be less prone to volatility and become a much more stable asset. Since Coil is much less correlated to Bitcoin and most cryptocurrencies, this will make it very beneficial in decentralized finance as a collateral asset, hedge asset, and medium of exchange.
What is important to note about Coil is that it is also non-dilutive. If you buy into the Coil network, and just hold, your share of the network will never change. You may have more or less coins, but your % share of the supply and market cap will not change. One of the problems with Proof of Stake cryptocurrencies is large holders that stake actually grow their market share quicker than the smaller stakers. Over the long run, this dilutes the smaller holders, while moving more of the control over the proof of stake network into the hands of the larger stakers. This leads to more centralization. Rebase and elastic supply currencies like Coil fix this. They do not dilute the small holders like staking does. This will allow for a stronger more decentralized base that is non-dilutive. This is another reason why elastic supply currencies are one of the biggest innovations in crypto since Bitcoin and Ethereum.
Unlike Bitcoin where the supply is finite and price is volatile, the price of Coil will generally coil and recoil closely around $1 especially as it matures. Coil transforms the price volatility of BTC into supply volatility creating a better medium of exchange and collateral asset. The future of Coil will be for use on many ecosystems including Polkadot, Tezos, Cardano, and others. We see Coil becoming a decentralized — self-governing — less correlated — more stable asset and a backbone of DeFi and cryptocurrency as it grows. Our vision is for Coil to grow and be fully turned over to its community via governance and controlled by its holders. On top of the current DeFi collateral plans, we plan on also pioneering a move into Private DeFi. Not many projects are working on this, but we believe there will be massive demand for this in the future. We will be exploring bridging into private ecosystems and Coil becoming that private Defi backbone and hedge in the near future. Coil is built to be non-dilutive, a better medium of exchange, a hedge asset, DeFi collateral and a stable store of value.