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Cogito proposes a new class of digital assets called “tracercoins”, which leverage an algorithmic protocol and a fractional reserve framework to approximately track synthetic indices. Our tracercoins utilize an open-source and permissionless protocol that combines AI with traditional algorithms. Initially, new tracercoins called GCOIN and XCOIN are being launched. They will trace different indices measuring environmental and technological progress and are both designed to change in value smoothly and steadily over time. GCOIN can be considered a new form of stablecoins, which is designed for low volatility and relatively low correlation to both fiat currencies and crypto assets like Bitcoin. XCOIN represents a different tradeoff between value increase and volatility, tracing exponential technological progress with reasonable precision but less exquisitely than what we expect for GCOIN. These tokens, along with future tokens in the Cogito tracercoin family, will be regulated by the native ecosystem token: the CGV token, which is used for both governance and supporting the algorithmic stabilization mechanisms. The goal of the Cogito Protocol is to create a framework that can digital assets with low volatility relative to their rate of value increase; that maintain their stability not by seeking explicit correlation to one or more specific fiat currencies or commodities, but instead via soft-pegging to synthetic indices that represent progress along various developmental fronts. The indices are constructed from a series of macro data reflecting environmental and technological progress, which are strongly resistant to manipulation, fluctuate moderately, and reflect the genuine progress of humanity. Since manipulating the value of these indicators would require Herculean resources and efforts, these tracercoins can provide fair and independent measures of value, which in a fundamental sense are more effective than any available alternatives. The Cogito Protocol aims to develop different products for usage across decentralized finance (DeFi) and conventional businesses. Different Cogito tokens may have different quantitative and qualitative properties but there will also be a common set of features. Users will always be able to trade the tracercoins within specific boundary values (the indices' boundaries). Classic cryptocurrency use-cases such as storage of value and payments can be more effectively fulfilled by Cogito tracercoins than by traditional cryptocurrencies, with their excessive volatility, or by traditional stablecoins with their frustrating and unnecessary fiat dependency. While algorithmic stabilization methods (both AI-based and traditional) are key to Cogito’s operation, they will not be relied on exclusively. A dynamic fractional reserve will back the protocol, after an initial fully collateralized phase, thus avoiding many of the problems associated with pure algorithmic stablecoins. The reserve will contain both liquid and illiquid components and will be managed by Cogito’s Algorithmic Stabilization Protocol (ASP) through a mix of familiar and novel techniques we call Autonomous Stabilization Functions (ASF). ASFs give the protocol flexibility such that in the long term, the reserve can transition into a fractional reserve based on some Capital Adequacy Ratio (CAR). The programmed rules adjust the fractional reserve and update minting and burning parameters and other mechanisms to make sure the CAR is sufficient to stabilize the tracercoins.

Category - Infrastructure
Release - 2022
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