About

Basis is a stable, algorithmic cryptocurrency protocol. They proposed a stable, decentralized cryptocurrency called Basis that uses regular, on-chain auctions of "bond" and "share" tokens to adjust supply in response to changes in demand. However, regulatory constraints prevented them from launching Basis, leading them to return capital to investors and shut down the project.

History

Basis, formerly Basecoin, is a decentralized cryptocurrency stabilized by an algorithmic mechanism that automatically adjusts the supply of Basis tokens up or down to stabilize the price per token relative to a defined asset. Unlike Tether, MakerDao, and TrueUSD, Basis does not collateralize its tokens.

Basis was launched by three Princeton graduates--Nader Al-Naji, Lawrence Diao, and Josh Chen--who believe the severe volatility of cryptocurrency prices prevents wider adoption among retailers, consumers, and financial institutions. The Basis team believes a decentralized stablecoin will accelerate adoption for: citizens in developing countries that have volatile native currencies; cryptocurrency traders who need a stablecoin to hedge their bets, the credit markets, which can’t afford to take currency volatility risk; and any application that needs a steady unit of account to optimize the user experience.

Basis aims to replace the functions of central banks with a decentralized protocol built on the Quantity Theory of Money, which ties long-run price levels to the supply and demand for money. The Basis protocol monitors the exchange rate of Basis tokens against a pegged asset and adjust the supply of tokens based on any changes in demand. If the price of a Basis token falls, the algorithm will shrink the supply of circulating tokens. If the price of a Basis token rises, the algorithm will similarly increase the circulating token supply.

The Basis team has raised over $100M in a private ICO from investors like Andreessen Horowitz, the Digital Currency Group, Lightspeed Ventures, Polychain Capital and others.