Intercoin is supposed to help facilitate a decentralized exchange between the currencies that are backed by it. Uniswap is a decentralized exchange built on Automated Market Makers – as the price goes up as people buy more of the currency. Now with v3, it will let certain liquidity pool providers set their own individualized settings for getting returns:
It would be interesting to see what kind of bonding curves we should implement for trading local currencies vs Intercoin. Right now we have been contemplating a basic flat price curve:
But it might be interesting to implement monotonically increasing price curves. Of course, as usual, each community will be able to set its own rules in the beginning, and people will know what they’re getting into by looking at the Intercoin App or any other compatible client.
Monotonically increasing price curves means the local currency wouldn’t be pegged to any outside currency, but rather can go up in price with demand. In some jurisdictions, like the US, it might take on some characteristics of a security (by the Howey Test) unless the community was already sufficiently decentralized. It’s also an open question whether community currencies should keep increasing in price. It seems that it’s far better to separate the asset that is designed to rise in price, from the community currencies that are meant to remain relatively stable or gently depreciate due to inflation. But that means, people will have to get the community currency for actual reasons, such as spending it on infrastructure (utility tokens) or vendors, content creators (currency), etc. That’s what we ultimately contemplate for Community Currencies implementation: