<p>So if I understand it correctly, the cryptocurrency basically represents a certain amount of your physical asset. Assuming you/your team is not seeking to reinvent the wheel, you could use an ERC20 (or higher) token protocol to implement this, though you would need an oracle to gather data from the non-blockchain world, which could be difficult depending on the physical asset you are seeking to tie the value of your token to. In order to prevent massive deflation, you would want a function in your code that is capable of expanding your token supply when the value of your underlying physical asset appreciates. You would also want to incorporate a way to prevent inflationary pressure. You could do this by charging a floating gas fee that changes based on the value of your underlying asset. Part of this fee could be sent to a wallet that cannot be accessed by anyone, burning the tokens. While it would be hard to keep the value of the token perfectly aligned with the value of your underlying asset, you could measure your success by using moving averages from the past t time period, and propose improvements to the protocols from further experimentation. Hopefully this helps, this seems like a cool idea.</p>

CC BY-SA 4.0
2022-01-07T04:49:42.923Z
2022-01-07T04:49:42.923Z
chutch
<p>I am in no way an economist (Just a computer programmer) and want to learn if we can use the gold standard (With improvements for using it in the Crypto domain)
For example;
If we have a physical asset &quot;ABC&quot;; where &quot;ABC&quot; has a hard limit of 6,500.
We also have a digital currency &quot;XYZ&quot;;  where there is no total cap to supply, the initial supply is 65 million with 1% deflationary burning.</p>
<p>In our example, how can we make the model sustainable? I mean how can we strike a balance between price of the &quot;ABC&quot; and &quot;XYZ&quot;.</p>
<ul>
<li>The problem I am having is to determine with the digital currency price pegged to a physical asset, how to determine when to generate more coins and how many should we generate?</li>
<li>1% deflationary burning of currency should be tied to physical asset price moving or the currency itself being converted to some other currency?</li>
</ul>
<p>I hope am making sense here :) again am no economist so please bear with me if i am asking very basic and stupid questions :)</p>

CC BY-SA 4.0
2022-01-07T04:11:12.680Z
Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking.
Community
CC BY-SA 4.0
2022-02-07T11:22:00.643Z
You seem to be asking a general question about how money supply should be managed and why the world moved away from the gold standard. Drop the cryptocurrency angle for a bit, and take a look at the history of the the [gold standard](https://www.investopedia.com/ask/answers/09/gold-standard.asp). See also https://www.econlib.org/library/Enc/MoneySupply.html and https://www.econlib.org/library/Enc/MonetaryPolicy.html
Paul Johnson
<mathematical-economics><currency><cryptocurrency><currency-peg>
Determining a better model for a new currency
RAY
# Determining a better model for a new currency

(Asked by: username_0 on 2022-01-07)

I am in no way an economist (Just a computer programmer) and want to learn if we can use the gold standard (With improvements for using it in the Crypto domain)
For example;
If we have a physical asset "ABC"; where "ABC" has a hard limit of 6,500.
We also have a digital currency "XYZ"; where there is no total cap to supply, the initial supply is 65 million with 1% deflationary burning.

In our example, how can we make the model sustainable? I mean how can we strike a balance between price of the "ABC" and "XYZ".

* The problem I am having is to determine with the digital currency price pegged to a physical asset, how to determine when to generate more coins and how many should we generate?
* 1% deflationary burning of currency should be tied to physical asset price moving or the currency itself being converted to some other currency?

I hope am making sense here :) again am no economist so please bear with me if i am asking very basic and stupid questions :)

**Tags:** mathematical-economics, currency, cryptocurrency, currency-peg

> **Comments:**
> **username_1**: Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking.  
> **username_2**: You seem to be asking a general question about how money supply should be managed and why the world moved away from the gold standard. Drop the cryptocurrency angle for a bit, and take a look at the history of the the [gold standard](https://www.investopedia.com/ask/answers/09/gold-standard.asp). See also https://www.econlib.org/library/Enc/MoneySupply.html and https://www.econlib.org/library/Enc/MonetaryPolicy.html  

---

## 1 answers

### Answer by username_3 on 2022-01-07. Score: 0

So if I understand it correctly, the cryptocurrency basically represents a certain amount of your physical asset. Assuming you/your team is not seeking to reinvent the wheel, you could use an ERC20 (or higher) token protocol to implement this, though you would need an oracle to gather data from the non-blockchain world, which could be difficult depending on the physical asset you are seeking to tie the value of your token to. In order to prevent massive deflation, you would want a function in your code that is capable of expanding your token supply when the value of your underlying physical asset appreciates. You would also want to incorporate a way to prevent inflationary pressure. You could do this by charging a floating gas fee that changes based on the value of your underlying asset. Part of this fee could be sent to a wallet that cannot be accessed by anyone, burning the tokens. While it would be hard to keep the value of the token perfectly aligned with the value of your underlying asset, you could measure your success by using moving averages from the past t time period, and propose improvements to the protocols from further experimentation. Hopefully this helps, this seems like a cool idea.


---

