05 Aug 2023
Cogito Protocol: A New Era of AI-Driven Stable Assets in the DeFi Landscape
Cogito Protocol offers a "stablecoin-as-a-service" framework to create digital assets with low volatility called “tracercoins” such that they act as complements to existing crypto stablecoin landscapes. The tracercoins maintain their stability not by seeking explicit correlation to one or more specific fiat currencies or commodities, but instead via soft-pegging to non-financial indices that represent progress along various developmental fronts, e.g. environmental progress, technological progress.
Cogito Protocol (website) is a decentralized and AI-driven stable asset that aims to create digital assets with low volatility called "tracercoins".
The team behind Cogito Protocol prioritizes risk management to ensure compliance, safeguard users' assets, and maintain the integrity of the market. 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. Ultimately, the Cogito tracercoin framework has the potential to become the dominant form of exchange and value storage mechanism on the planet.
We wrote this article to provide a simple and accessible introduction to Cogito Protocol. The platform offers a unique "stablecoin-as-a-service" framework, creating tracercoins that complement the existing crypto stablecoin landscape. Unlike traditional stablecoins, tracercoins are not explicitly correlated to specific fiat currencies or commodities. Instead, they are soft-pegged to non-financial indices that represent progress in various developmental areas, such as environmental progress and technological advancement. These indices are constructed from a vast array of macro data, making them resistant to manipulation and reflective of genuine human progress.
Cogito Protocol offers a "stablecoin-as-a-service" framework to create digital assets with low volatility called tracercoins such that they act as complements to existing crypto stablecoin landscapes. The tracercoins maintain their stability not by seeking explicit correlation to one or more specific fiat currencies or commodities, but instead via soft-pegging to non-financial indices that represent progress along various developmental fronts, e.g. environmental progress, technological progress and more. The indices are constructed from a large series of macro data, 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,
While algorithmic stabilization methods (both AI based and traditional) are key to Cogito’s operation, they will not be relied on exclusively. A risk-weighted reserve will back the protocol to ensure that the stable assets can be redeemed under all circumstances, thus avoiding many of the problems associated with pure algorithmic stabilization. The reserve will contain both liquid and illiquid components and will be managed by Cogito’s Algorithmic Stabilization Protocol (ASP) through a mix of AI techniques defined by the Autonomous Stabilization Functions (ASF). The programmed rules adjust the risk-weighted reserve and update minting and burning parameters and other mechanisms to make sure the reserve is sufficient to stabilize the tracercoins.
Cogito protocol has the potential to be used in various industries and use cases such as banking, healthcare, transportation, payments, and value storage. For instance, in healthcare, AI-enabled content analytics can enhance providers' ability to administer effective and efficient treatment protocols by speeding up the process of coordinating care and detecting issues or diagnosable health issues. In finance, Cogito Protocol offers an AI-driven framework for tracercoins, a new class of digital assets that includes a stablecoin completely independent of fiat or any other digital asset. Tracercoins are not tied to fiat or other traditional financial instruments like stablecoins are. Instead, they track synthetic indices that measure global human development.
Cogito Protocol's innovative solution might change the DeFi, and the company noted that different Cogito tokens might have different qualitative and quantitative properties, but it also added that it would provide a common set of features available for all. Customers will be able to trade the tracercoins, but only within specific boundary values. Ultimately, the Cogito tracercoin framework has the potential to become the dominant form of exchange and value storage mechanism on the planet.
Cogito Protocol's leadership team is a blend of expertise in AI and finance. At the helm is Cloris Chen, the Chief Executive Officer, who brings a unique mix of banking experience, DeFi knowledge, and entrepreneurial spirit. She has a six-year stint at HSBC and has served as a treasury director for a high-profile startup. Currently, she's enhancing her tech skills by pursuing a Master’s degree in Computer Science at the University of Pennsylvania. The Chief Science Officer, Ben Goertzel, is a globally recognized AI expert and a pioneer in artificial general intelligence. He's the brain behind SingularityNET, a renowned AI company. His contributions to the field of AI are well-documented and can be explored on his Wikipedia page.
Janet Adams, the Chief Operating Officer, is a seasoned professional with 25 years of experience in financial services. She's a former senior banker at HSBC and has a deep understanding of financial markets and the crypto industry. Janet's strategic planning skills and interdisciplinary expertise in AI are invaluable to the team. The role of VP of Engineering is ably handled by Tony Zhu. Tony's experience spans tech and finance, having previously served as a Tech Lead at Meta. He holds a Master’s degree in computer science from Harvard and has a commendable record of developing machine learning and infrastructure technologies.
S Pin, the Chief Marketing Officer, is a seasoned leader with a track record of success in startups. His experience at Binance has equipped him with a deep understanding of the blockchain world and has honed his marketing skills. Nejc Znidar, a Quantitative Analyst, brings his data science expertise to the team. He has six years of experience in data-intensive modeling and has been developing cryptocurrency fintech trading and risk management models since 2017. Nejc's background in mathematics and finance makes him a valuable asset to the team.
In addition to its core team, Cogito Protocol has formed strategic partnerships. SingularityDAO, a decentralized platform for AI-generated art, and Xerberus Labs, a solution provider for blockchain and cryptocurrency projects, are among its key partners. These collaborations further strengthen Cogito Protocol's position in the market.
Cogito is introducing the first algorithmic digital assets designed to achieve relative stability without introducing direct dependence on fiat currencies, commodities, or other traditional financial instruments. Rather, they are designed to increase in value smoothly and steadily with the progress of humanity, by soft-pegging to non-financial indices that quantify aspects of global human development, such as social advance, environmental progress, and technological growth.
This approach to managing the stability/volatility tradeoff without explicit reference to fiat currencies allows some of the long-term goals of crypto-finance to be achieved far easier than before. Cogito’s mechanisms solve the problem of creating tokens providing long-term value-storage with manageable volatility, as well as the problem of providing a steady and reliable payment token for both micropayments and larger transactions.
Each Cogito tracercoin is backed by a reserve comprising a variety of assets appropriate to the underlying index to which the asset is soft-pegged. Additional stabilization is provided by algorithmically driven methods, including traditional techniques familiar from fiat-based stablecoins, and more innovative variations that incorporate AI predictive analytics and reinforcement learning.
Cogito’s algorithmic protocol ensures that its tokens can be continuously traded within specified trading boundaries and that they can always be minted or redeemed from the protocol for a target value. These properties allow arbitrageurs to balance the demand and supply of tokens and let the price dynamically reach an equilibrium.
The assets contributed by users are managed judiciously as two components: liquid and illiquid assets. Liquid assets are primarily fiat-pegged stablecoins such as USDC or DAI, and illiquid assets are investments that are less readily available to depositors in case of liquidation. These components represent the primary sources of the protocol's liquidity.
For a period immediately after launch, this reserve will consist of a basket of stablecoins; then, when the project builds up the reserve to a satisfactory higher level, more volatile assets will slowly be introduced
The Cogito Protocol's tokenomics is designed around the CGV governance token and three main protocols: the Algorithmic Deposit Protocol (ADP), the Algorithmic Stabilization Protocol (ASP), and the Algorithmic Governance Protocol (AGP). The CGV governance token plays a crucial role in regulating the use of these mechanisms. It provides a tool for democratic decision-making and rewards for users, and also serves as a critical stabilization mechanism of the ecosystem. The intrinsic value of the Cogito governance token is positively correlated with tracercoin adoption. If the ecosystem grows and tracercoins are in high demand with a healthy Capital Adequacy Ratio (CAR), some percentage of the illiquid reserve can be used to buy back CGV tokens, aligning incentives among both CGV users and tracercoin users.
The ADP allows users with different risk appetites to deposit their tracercoins with customizable tenors to earn a floating yield, generated from the illiquid reserve managed by the treasury. This yield is distributed both in CGV tokens and stablecoins. The ASP aims to maintain the market price of the tracercoins within specific trading boundaries of their respective indices. The algorithmic stabilization functions adjust the Capital Adequacy Ratio to ensure stability. The AGP concerns CGV tokens. The intrinsic value of the Cogito governance token is positively correlated with tracercoin adoption. If the ecosystem grows and tracercoins are in high demand with a healthy CAR, some percentage of the illiquid reserve can be used to buy back CGV tokens, which aligns incentives among both CGV users and tracercoin users.
As for the market data, the price of CGV is $0.039, the fully diluted valuation of CGV is $39,433,085. This is a statistical representation of the maximum market cap, assuming the maximum number of 1 Billion CGV tokens are in circulation today
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Cogito Protocol is a project that brings together the worlds of AI and DeFi in a unique way. By creating a new class of digital assets known as tracercoins, it offers a stablecoin alternative that is not tied to traditional financial instruments. Instead, these tracercoins are soft-pegged to non-financial indices that reflect the genuine progress of humanity, offering a fair and independent measure of value.
The team behind Cogito Protocol is a blend of AI and finance experts, each bringing their unique skills and experiences to the table. Their combined expertise, along with strategic partnerships with SingularityDAO and Xerberus Labs, positions Cogito Protocol well in the market.
The platform's tech is equally impressive, introducing the first algorithmic digital assets designed to achieve relative stability without direct dependence on fiat currencies, commodities, or other traditional financial instruments. This innovative approach allows some of the long-term goals of crypto-finance to be achieved far easier than before.
The tokenomics of Cogito Protocol, centered around the CGV governance token and three main protocols, is designed to align incentives among both CGV users and tracercoin users. The intrinsic value of the Cogito governance token is positively correlated with tracercoin adoption, creating a healthy ecosystem where growth benefits all participants.
In conclusion, Cogito Protocol is an innovative project with a strong team and unique technology. It's a project worth keeping an eye on as it continues to develop and disrupt the DeFi sector.
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