In this article, the definition of algorithmic market operations (AMOs), all about algorithmic market operations (AMOs), properties of AMO will be highlighted.

Are in control of the supply of algorithmic stablecoins and at the same, improve scalability, decentralization and transparency. The definition of algorithmic market operations (AMOs).


Our knowledge about standard stablecoin is very simple. The most common ones are fully collateralized stablecoins that are backed by either order, crypto or on-chains tokens that can be regained or exchanged. Tether (USDT) is an example of collaterized stablecoin which is the most used stablecoin with a market value of more than $60 billion as of July 2021.

Contrast, Tether which is manually mints or burns to increase or decrease its supply. Algorithmic stablecoin spontaneously depend on algorithmic market operation (AMOs) modules to control supply. This benefit/advantages to the system enables for scalability, decentralization and transparency.

Provision of AMO solution help a stablecoin to achieve the growth and size needed for adoption. It also remove the need for a centralized team to make in-house decisions, as that task will lie mainly with smart contracts. This reduces the risk of human error and manipulation in-turn.


There are four properties of every AMO, namely;

  1. Decollateralization – Which involves decreasing the collateral ratio.
  2. Market operations – Is part of the strategy that doesn’t change the collateral ratio.
  3. Recollateralization – This increase the collateral ratio
  4. FXS1559 – Is the precise amount of FXS that can be burned and still leave profits above the targeted collateral ratio.

To keep the stablecoin “stable”, when the price gets above its stable peg. The collateral ratio is lowered, that supply expands as it normally does and the AMO controllers continues to run.

Conversely, if the collateral ratio becomes so low that the stablecoin loses its peg. The AMO will be able to use the predefined recollateralization operation to increase the collateral ratio up again.

However, AMO can be described as a “mechanism-in-a-box”. Building an AMO is possible, if the specifications of using complex algorithms in their smart contracts. Or algorithmic operated market controllers (AMOs) is followed, these types of stablecoins can increase or decrease their token’s circulating supply. However, this makes the stablecoin capital efficient. As it issues extra coins when the price rises and burns them off if its value falls. The need for collateral backing is also removed.

Basis cash and Empty set Dollar are examples of algorithmic stablecoins.

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