Hi All,

Not much to introduce about myself. Very little technical knowledge, but have an interest in economics and alternate ways of organization of society.

Here are my thoughts on the issue of a stable crypto coin. Caveat, They don't form a coherent whole.

[Thought 1  - Locking of coins] 

There are 2 sources of inflation in a crypto-currency. There are the new coins generated and there is the influx of already existing coins coming into the market on the sell side.

I asked a question earlier in the forum about "locking" of coins, rendering them unspendable for sometime. This would create a clearer picture of the money supply that is in actual usage now.

Right now, people say that a lot of their coins are in cold storage, but we have no way of verifying the same. They can appear anytime in the nearest exchange and drive down the price to whatever the market will bear at that time. So stablecoin needs to have a way of clearly placing coins in cold storage in plain sight, with clear indicators that during the next few hours, days or so, more than X number of coins or Y percentage of coins, simply cannot be traded. Thus, not only is the money supply (M1, is it?) in plain sight, but money placed in short term and long term locked coins (bonds?) is also in plain sight.

The issue really is that these bonds will also be traded and we may be back at the same place where we are now, but atleast merchants who deal only with the coin can be more assured, I think. How to incentivize people locking up their coins publicly, not really sure.

I read a few threads on this and realize that all of your thinking on this is much more advanced, but my above point was not made explicitly anywhere, so I thought it is better to put it out there.

[Thought 2 - Liquidity, Velocity, etc.]

The best suggestion that was made in this regard was coin days destroyed, but coin days destroyed could be manipulated by round tripping to one's own account. To counteract that, one can have a minimum transaction fee. A transaction fee however, is something that should be decided by benchmarking against competitors.

[Thought 3 - Demurrage]

The simplest forms of demurrage are flat percent off every account and a flat fee off every account. One is a flat tax, the other is a regressive tax. For a currency, the first one seems to be the better. An authority imposing a currency may have the second to persuade people to centralise their account (maybe with a bank).

A progressive demurrage may lead to people choosing to split the currency across many accounts, thus not yielding much more than a flat percentage.

[Thought 4 - Incentive]
List of people to incentivize
1. People holding the currency, but not too much
2. Verifiers/miners
3. Merchants providing new and needed products to the community
4. Publicly locked coins

So, there they are, my thoughts or a incoherent ramble, as some might portray it.