Maker DAI is one of the asset backed stablecoins (in this case the asset is still in crypto - there are other stablecoins where the asset is outside of the crypto sphere). What made Basis really interesting is that it was purely algorithmic, i.e. it was entirely self contained with its own monetary policy issuing in effect both stocks and bonds.
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DAI is purely algorithmic as well. It's all smart contract based issuance. But it is asset backed rather than some fiat system.
Are you saying Basis is fiat?
I don't think you can call DAI purely algorithmic because it needs oracles to work.
I think chrisco255 is saying Basis and DAI aren't one of the stablecoins backed by actual fiat. I believe there are 4 sorts of stablecoins:
- Ones backed by fiat, or allegedly backed by fiat[0].
- Ones backed by commodities, e.g. the organisation that issues the UK's coinage (The Royal Mint) was looking at issuing RMG tokens backed by their gold reserves[1] (they've since stopped work on this even though it is still listed on their web site).
- Ones backed by other crypto assets, e.g. Maker DAO's DAI depends on ETH as its collateral.
- Ones not backed by any external asset outside of its own system, e.g. Basis.
The algorithms for the last class are particularly interesting in that they essentially have to model what a central bank does. I'd be interested to find out why Basis has failed. Is it just that they were unable to comply with US regulations? Or is it that the algorithm itself wasn't viable?
I would argue that it was a fiat system modeled somewhat closely to the U.S. monetary system.
Point is that DAI has economic incentives in code to keep its price in check.
DAI is backed by ETH. that's the critical difference here. You can't have a stable coin backed by itself, that's a perpetual motion machine