Researchers at the federally funded Lawrence Livermore National Laboratory in California have combined statistical mechanics and information theory to design a stablecoin they call Electricity Stablecoin (E-Stablecoin) that would transmit energy as a form of information. Maxwell Murialdo and Jonathan L. Belof of Livermore say their innovation would allow electricity to be transmitted without physical wires or a network, creating a fully collateralized stablecoin tied to a physical asset – electricity – that depends on its utility for value.
According to scientists, the E-Stablecoin would be minted through the contribution of one kilowatt-hour of electricity, plus a commission. The stablecoin could then be used for transactions in the same way as any stablecoin, or the energy could be extracted by burning it, also for a fee. The entire process would be controlled by smart contracts with a decentralized data storage cloud. No trusted centralized authority would be needed to hold or disburse the asset.
This would be the first time that a hard-pegged stablecoin has been created, that is, that it can be exchanged directly for a specific amount of a physical asset, the scientists said. They suggested that the electricity has a very stable price and demand, and the electricity used to mint E-Stablecoins would be easily sustainable. Investors could mint E-Stablecoins in regions where electricity prices are low, and burn the tokens where electricity is more expensive.
Murialdo and Belof described their work as a proof of concept and made extensive use of advanced mathematics for their reasoning. To make a working E-Stablecoin, “further advances that increase the speed, transfer entropy, and scalability of information engines will likely be needed.”
It would also be necessary to improve cloud storage, or an alternative to it. Meanwhile, his research has theoretical implications for how cryptocurrencies get their value, the authors said. Their work was published Monday in the peer-reviewed journal Cryptoeconomic Systems.
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