We have described a hybrid protocol comprising of a new class of digital assets based on an algorithmic ecosystem that manages “tracercoin” tokens designed to increase in value smoothly and steadily over time, along with a separate CGV governance token. Cogito’s tracercoin tokens are different from any other stablecoins or cryptographic tokens because they are designed not to maintain a stable value relative to one or more fiat currencies or commodities, but are instead soft-pegged to non-financial indices that represent the steady progress of humanity.
We have also reviewed the algorithmic and economic mechanisms that will enable Cogito tracercoins to carry out this soft-peg. Regulated by the risk-weighted-reserve, the protocol dynamically updates the collateral ratio by taking into account price volatility, systemic risk, and ecosystem growth rate.
Autonomous stabilization functions form the core of the protocol. These functions adjust the capital adequacy ratio algorithmically to balance supply and demand of tracercoins, leveraging AI along with traditional quantitative-finance methods. The protocol is expected to enable a sustainable appreciation of tracercoins over the long run.
These tokens will fulfill the original vision of cryptocurrencies as digital monies: secure and privacy-preserving, democratic and decentralized in governance and operation, and stable enough to be used as stores of value and payment currencies.