Seigniorage Shares

Seigniorage style stablecoins represent an algorithmically governed approach to expanding and contracting a stablecoin’s money supply. They are inspired by a 2014 paper written by Robert Sams, and constitute one of the three primary approaches to stablecoin development, the two others being, respectively, on-chain (MakerDao) and off-chain (Tether) collateralized stablecoins. Seigniorage-style stablecoins are designed to have flexible money supplies governed by algorithms that programmatically buy and sell a stablecoin’s tokens, often issuing a redeemable bond or coupon to incentive buyers when the stablecoin declines below par value, in order to maintain the token price near the intended peg. While stablecoins of this genre are effectively untested in practice, their promise has aroused considerable interest.