Why does CYCLE token peg to CHF make sense?

General DFINITY
#1

The CYCLE token has been presented as a revolutionary type of stable coin where 1 CYCLE token pegs one trillion cycles (known as a “T”) to one Swiss franc (CHF).

I’m very confused as to how this makes economic sense. It seems well understood that the price of computation gets cheaper over time. Why would one T always be worth one CHF? It seems to me that Moore’s Law, etc, would drive the price of computation down over time and that CYCLE tokens would get grossly overpriced for the fixed amount of computation that they represent.

What am I missing?

Are CYCLE tokens not pegged to computation?

Am I not understanding the definition of what a single ‘cycle’ is?

How does a CYCLE token remain economically valid over time and achieve its ‘stablecoin’ status?

Please help me understand.

Thanks!

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#2

That’s a good point @mac. I think using the power of the NNS it’s possible to decide on a new amount of cycles being pegged to one CHF if it begins to feel unreasonable in the future. Also it could be that a cycle isn’t really a cycle in the sense of a CPU cycle but a unit of computation in general. One could also tinker with the amount of computation one cycle represents.

#3

There should be some measure of overall compute power that is available on the Dfinity network and its relationship to the CYCLE token. Then the CYCLE token could perhaps be pegged to some related ratio, not to a fixed number of cycles. Then the NNS could monitor and calibrate the number of cycles that one CYCLE represents over time. As Dfinity nodes upgrade over time, the overall compute power would increase and then the NNS would increase the number of cycles afforded to one CYCLE token. Maybe the NNS could even make CYCLE tokens more valuable on higher spec nodes or different types of nodes. This would be a true peg to network compute power and that would not only be a real stablecoin but actually revolutionary.

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