In the real world,

let's say I have some Commodities Certificates each of the cost of 1000 USD $ and I want to create new tokens with the same value (in Ether).

USD Dollars and Ethers are volatil so in Solidity how can I deploy these new tokens?

  • I am wondering the same question. I believe oracles are meant to help you. It is a smart contract that you can query in order to get current usd/eth rate. Thus you can set your price adaptively. The particular Oracle to use is an open question. Maybe someone here can suggest one? Aug 1 '17 at 14:09

Firstly, you can't exactly do this, because static value cannot be assigned to something with variable value. You can tether a token to the price, but the actual cost of converting the token to fiat will always be included in the exchange. If the Ethereum network ceases to exist, those tokens will also become worthless. This is also a risk that will always be priced into the token.

So while it is possible to tether something, it is impossible to peg it exactly. It's still a derivative product. Any number of derivative products can be created to mitigate risk, including tethered tokens, but there is always a price to be paid for reducing variance. The more volatile the underlying asset, the more you will pay to reduce exchange risk.

If you are looking to for the technical aspects of doing this, please start with Vitalik's SchellingCoin article. https://blog.ethereum.org/2014/03/28/schellingcoin-a-minimal-trust-universal-data-feed/

There is more than one strategy for doing a tether, and there are compromises to be made no matter which contract you write.

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    I read your link...however I don't understand how for example here can have a DGX coin that has a value of 1 Gram of gold then. Jun 29 '17 at 7:01
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    You can issue a token as an open ended contract for delivery of an asset, but it's possible they go out of business, or the supply of gold dries up (for whatever reason). My point is that you cannot ever define value exactly with a derivative product. People might all agree that USDT tokens are worth $1, and a company might exchange them at par, but the derivative product is always subject to the risk of market forces. In practice, you give up about .5-1% to exchange in and out of USDT, but when there are runs during volatile days, the price spikes. Jun 29 '17 at 20:46
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    Have a look at the gold certificates wiki: en.wikipedia.org/wiki/Gold_certificate The gold certificates traded both at above par and below par depending on the time and political factors. The government eventually decided to print money when it wanted and abandoned the gold standard. Those left holding certificates after the redemption date were completely SOL, unless they held a very long time, and then the collectible value exceeded the face value due to the scarcity. Jun 29 '17 at 20:52

you can create and distribute a stable-value token using an ERC20 smart contract. the token should not be traded to avoid the volatility due to the speculation. but you need to back it by so;thing real having an intrinsic stable value or pseudo-stable like gold.

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    If today I create an ERC20 contract with a value of 3.14 ETH (because it's not possible to create using another currency) tomorrow the ETH value will be different but instead my value of the contract must be always 1000$ Jun 28 '17 at 22:17
  • Were you able to figure out a solution to this? Jan 14 '18 at 13:33

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