Truthful and Faithful Monetary Policy for a Stablecoin Conducted by a\n Decentralised, Encrypted Artificial Intelligence

Abstract

The Holy Grail of a decentralised stablecoin is achieved on rigorous\nmathematical frameworks, obtaining multiple advantageous proofs: stability,\nconvergence, truthfulness, faithfulness, and malicious-security. These\nproperties could only be attained by the novel and interdisciplinary\ncombination of previously unrelated fields: model predictive control, deep\nlearning, alternating direction method of multipliers (consensus-ADMM),\nmechanism design, secure multi-party computation, and zero-knowledge proofs.\nFor the first time, this paper proves:\n - the feasibility of decentralising the central bank while securely\npreserving its independence in a decentralised computation setting\n - the benefits for price stability of combining mechanism design, provable\nsecurity, and control theory, unlike the heuristics of previous stablecoins\n - the implementation of complex monetary policies on a stablecoin, equivalent\nto the ones used by central banks and beyond the current fixed rules of\ncryptocurrencies that hinder their price stability\n - methods to circumvent the impossibilities of Guaranteed Output Delivery\n(G.O.D.) and fairness: standing on truthfulness and faithfulness, we reach\nG.O.D. and fairness under the assumption of rational parties\n As a corollary, a decentralised artificial intelligence is able to conduct\nthe monetary policy of a stablecoin, minimising human intervention.\n