Base case: MakerDAO’s DAI stablecoin

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Overview

Most stablecoins have complex systems of parameters that need humans to constantly watch and adjust them to keep their value steady. Many collapse under the pressure of slow, manual governance that just can’t adapt in time. With Ritual, you can create smarter money that uses AI to watch the market and adjust itself automatically, ensuring a more efficient and transparent protocol.

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Traditional System Failures

Current stablecoin systems operate in a primarily reactive manner, lacking the ability to anticipate and preemptively address market fluctuations. The reliance on manual governance votes or designated entities for parameter adjustments creates significant operational friction. This setup leads to delayed responses to changing market conditions and imposes a heavy coordination burden just to maintain the peg. The transparency of these systems, while important for trust, becomes a double-edged sword as it enables parameter gaming. Malicious actors can exploit the predictability of parameter changes and governance decisions, creating opportunities for governance extractable value and allowing sophisticated traders to front-run anticipated parameter adjustments. Perhaps most concerning is the fundamental opacity of the stabilization models themselves. Users and stakeholders have no reliable way to verify how these stabilization mechanisms function, especially during critical depegging events. This lack of verifiability not only undermines confidence in the system but also stifles innovation by limiting meaningful competition in the development of improved stabilization models.

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Ritual Solutions

Ritual is uniquely positioned to solve many of these issues:
  1. Heterogeneous Compute: Enables high-frequency parameter adjustments via ML models executed on-chain with verifiable privacy
  2. Scheduling: Enables automated execution of parameter updates without governance delays; prevents adversarial gaming from actors interfering with oracle updates
  3. DON Integration: Native enshrined oracles enable reliable, real-time data feeds