After the publication of the article "Standard Reserve: An Attempt at 'On-chain Central Banking'" on September 1st, readers raised several interesting questions in the comment section, and today I would like to share my understanding of these questions.

1. After reading it, I feel like it's anchored to ETH's trading volume. If, hypothetically, ETH were to collapse one day or be replaced by another public chain, how would its value stabilize?

This protocol is not anchored to "ETH's trading volume," but rather to the amount of ETH flowing into the "ETH/STANDARD" trading pair.

Once the "ETH/STANDARD" trading pair goes live, there is a possibility that someone will sell ETH at any given time, while others will buy ETH. If we consider trading volume, the amounts bought and sold would both be counted.

However, this protocol calculates the "amount of ETH sold - amount of ETH bought."

If the value above is positive, it means ETH is flowing into this trading pair, at which point STANDARD will accelerate its issuance; otherwise, STANDARD will decelerate its issuance.

"......how would its value stabilize?"

Currently, this protocol supports the entire market value of STANDARD with gold (Tokenized GOLD)—that is, the "hard asset" defined in the protocol, not ETH.

So even if ETH becomes worthless in the future, as long as the gold tokens it purchases are strictly anchored and exchangeable like USDC with actual US dollars, its total market value will be the total market value of the gold it holds.

Here I would like to express my personal opinion:

This protocol could actually be experimented on any public chain; it does not have to be limited to the Ethereum ecosystem. Therefore, if the sole purpose is to verify whether this protocol is feasible, any chain will suffice. After all, the hard asset it currently purchases on any chain is gold.

However, in my view, the best and most reliable way to conduct this experiment is not on a second-layer network, but on the Ethereum mainnet. Because the Ethereum mainnet currently has the largest financial volume and fund size in the entire crypto ecosystem and is the safest and most reliable smart contract mainnet—this is the most suitable testing ground for similar monetary experiments.

2. Anchoring to tokenized gold? It feels like the problem starts from this anchor.

Anchoring to gold is also a point I find hard to understand about this protocol. From this point, I can vaguely see the creator's deep-seated "obsession" with the "physical world" and a lack of security regarding the on-chain ecosystem.

In my view: Since you want to create a purely on-chain central bank, then you should completely operate a pure on-chain mechanism, especially ensuring that the foundation of this mechanism is purely "on-chain attributes."

Why not just use ETH as the hard asset instead of going around in circles with tokenized gold?

I guess the creator might think that compared to ETH, gold's price volatility is lower, so they chose gold as the value base. But if we look to the future, believing that the crypto ecosystem will one day become a colossal entity, then ETH will definitely also move towards a state of very low price volatility, eliminating such worries.

Why am I using the "looking to the future" perspective to view this experiment?

Because the original intention and ideal of this experiment are quite long-term and forward-looking, and therefore should match a long-term perspective and mindset for analyzing the issue.

Furthermore, the "tokenized gold" used by the creator has a major potential issue: it introduces a centralized role.

Whether the tokenized gold really has value and can ensure rigid redemption is guaranteed by centralized institutions. If one day, there are issues with the issuing institution of the tokenized gold used in the experiment, the effectiveness of this experiment would be greatly diminished.

So from any angle, I prefer to use ETH directly rather than the so-called tokenized gold.

3. "The approach is indeed novel; I feel it's more like a slightly longer-lasting Ponzi? And if this approach is successful, won't it be easy for others to replicate?"

If this approach can succeed, being copied wouldn't be a bad thing.

However, what I care more about is whether this protocol, if successful, can enable future generations to develop a clear stablecoin protocol based on its foundation. That stablecoin need not be anchored to the dollar but gradually become a truly independent on-chain currency, unaffected by centralization, and widely adopted and used.

Sometimes I wonder: perhaps the kind of stablecoin I expect that doesn’t have to be dollar-anchored already exists—it's ETH. But maybe many people still cannot accept this viewpoint.

This article is all about critiquing this protocol. However, all things considered, I am still very much looking forward to its success; I hold great respect for any project that has the courage and boldness to carry out such creative experiments.

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