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Automatic Market Adjustment as a Proposed Cryptocurrency Stabilization Mechanism

Article arXiv papers · Author: Wantall Newby et al.
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Summary

The document introduces Automatic Increase Market Systems (AIMS), a proposed framework for cryptocurrencies that aims to make value less dependent on volatile exchange prices. It describes a system that would adjust a token’s value and supply in response to market demand, with the intended effect of stabilizing its price and increasing value over time. The authors present WISH as an implementation intended to demonstrate how this mechanism could work and support a stable medium of exchange.

The document offers a conceptual proposal and names a token as an example, but it does not explain the adjustment rules, provide quantitative analysis, or report tests of price stability. Its claims about deterministic value, fairness, and transparency therefore remain goals rather than findings established by the material provided. The proposal’s practical limits and behavior under changing demand are not discussed.

Key ideas

  • AIMS proposes adjusting cryptocurrency value and supply in response to market demand.
  • The stated goal is to reduce exchange-driven price fluctuation and support a stable medium of exchange.
  • WISH is presented as an implementation intended to illustrate the proposed system.
  • The document provides no adjustment formula or empirical evidence that the mechanism stabilizes prices.

Tags

CryptoDeFiRisk management
Full text
# Automatic Increase Market Systems (AIMS): Towards a deterministic theory for cryptocurrencies


# Automatic Increase Market Systems (AIMS): Towards a deterministic theory for cryptocurrencies









The popularity of cryptocurrencies has grown significantly in recent years, and they have become an important asset for internet trading. One of the main drawbacks of cryptocurrencies is the high volatility and fluctuation in value. The value of cryptocurrencies can change rapidly and dramatically, making them a risky investment. Cryptocurrencies are largely unregulated, which can exacerbate their volatility. The high volatility of cryptocurrencies has also led to a speculative bubble, with many investors buying and selling cryptocurrencies based on short-term price fluctuations rather than their underlying values. Therefore, how to reduce the fluctuation risk introduced by exchanges, transform uncertain prices to deterministic value, and promote the benefits of decentralized finance are critical for the future development of cryptos and Web 3.0. To address the issues, this paper proposes a novel theory as Automatic Increase Market Systems (AIMS) for cryptos, which could potentially be designed to automatically adjust the value of a cryptocurrency helping to stabilize the price and increase its value over time in a deterministic manner. We build a crypto, WISH (https://wishbank.wtf), based on AIMS in order to demonstrate how the automatic increase market system would work in practice, and how it would influence the supply of the cryptocurrency in response to market demand and finally make itself to be a stable medium of exchange, ensuring that the AIMS is fair and transparent.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.