Scientists claim to have created a fully decentralised stablecoin tied to the price of electricity.

Scientists claim to have created a fully decentralised stablecoin tied to the price of electricity.

The E-Stablecoin would necessitate a number of technological breakthroughs that are already in the works, and would reportedly make electricity transmission nearly free.

The Electricity Stablecoin (E-Stablecoin) was designed by researchers at the government sponsored Lawrence Livermore National Laboratory in California, who used statistical mechanics and information theory to create a stablecoin that would transport energy as a kind of information. Maxwell Murialdo and Jonathan L. Belof of Livermore say their invention will allow power to be transmitted without the use of physical cables or a grid, as well as establish a completely collateralized stablecoin tied to a physical asset – electricity – and whose value is determined by its utility.

According to the researchers, the E-Stablecoin would be created by putting one kilowatt-hour of electricity into the system, plus a fee. The stablecoin could then be used in the same way as any other stablecoin, or the energy could be extracted for a price by burning it. Smart contracts would control the entire process, which would be backed up by a decentralised data storage cloud. To preserve or disburse the asset, no centralised authority would be required.

According to the scientists, this would be the first time a hard-pegged stablecoin could be immediately exchanged for a predetermined quantity of a tangible object. They claimed that power has a very steady price and demand, and that the electricity used to mint E-Stablecoins could easily be sustained. Investors would be able to mint E-Stablecoins in low-cost areas and burn the tokens in higher-cost areas.

According to the researchers, this would be the first time a hard-pegged stablecoin could be directly exchanged for a specific amount of a tangible item. They claimed that electricity has a very steady price and demand, and that the electricity required to produce E-Stablecoins is simply sustainable. Investors would be able to mint E-Stablecoins in low-cost areas and burn them in high-cost areas.

Murialdo and Belof described their study as a proof of concept, and their reasoning relied heavily on advanced mathematics. According to the scientists, "additional developments that boost the speed, transfer entropy, and scalability of information engines will likely be necessary" to create a workable E-Stablecoin.

Improved cloud storage, or an alternative, would be required as well. Meanwhile, their findings have theoretical implications for how cryptos earn their value, according to the authors. On Monday, their research was published in the peer-reviewed journal Cryptoeconomic Systems.