The Most Important Thing for Algo Stablecoins

Elena Protocol
2 min readApr 26, 2021


In Algorithmic Stablecoin, we have come such a long way to what we have achieved today. We tried to explore the different ways to create a successful Algo Stablecoin, and failed many times.

From the famous Basis Coin, which was later shut by the SEC, to AMPL, ESD, BAS, FRAX, FLOAT, OHM, or the most recent, FEI. We kept trying, not just because the great profit was being made on the way, more importantly, the whole DEFI was built on centralized stablecoins, like USDT, USDC, BUSD etc.

It is always funny to think about it, the whole DEFI ecosystem was built on centralized stablecoins, whether they are 100% non transparent, like USDT (technically speaking, USDT is already an algorithmic stablecoin), or 100% compliance, like USDC, which technically can block any account (hang on, isn’t blockchain decentralized?)

Thurs we look for decentralized currency, like what Bitcoin was orginally planned to do , a Peer to Peer Electronic Cash System. More than 10 years has past, Bitcoin becomes Electronic Gold instead of Cash. But, the search for decentralized money continues.

In the past attempts, many projects tried to solve this problem. Many of them failed, but their existence bring valuable experience to the projects to be launched on what works, and what doesn’t work. The only project achieved pegging to $1 is FRAX. All pure algorithmic stablecoins (which means there is 0 reserve backing) failed.

We studied ALL algo stablecoins, invested in most of them, and watched closely on what happened to the community. We think that most of them missed the fact that to be a stablecoin, there needs to be natural demand to use that stablecoin. Mining your own SHARE token is not a real demand. I think some of the projects founders realized that and trying to cooperate with other projects for real use case, which is long and painful process, a lot of times before the real use case happens, the whole thing collapse.

What we want to do things differently is that to create your own use case, instead of relying on someone build use case for you. It doesn’t make much sense for other projects to have your untested stablecoin whereas they can use USDT, USDC, or DAI.

We already have a list of projects planned which are built on USE as core stablecoin. We understand there are a lot of demand in DEFI that is yet to be fulfilled. We believe we could achieve this because we have a strong development team. The past week has already demonstrated this.

The journey has just began.