“The critical insight is that as long as traders expect Basis price to correct [and grow] in the long-term...” which makes a prerequisite out of what they need to demonstrate.
And then there’s the part where they prove that their algorithm works by pretending that their currency behaves like USD does. Of course if your currency behaves like one of the most successful fiat currencies of all time, backed by the most powerful government in the world, then everything will be okay. If my hypothetical elderly Chihuahua dog had the driving ability and limbs of Micheal Schumacher in his prime, then my Chihuahua could turn in some nice lap times at the Nurburgring.
I think you're being unfair with your quotation there. The point they were making was that their system works over time, so whilst there can be temporary disjunctions on the long term the mechanism works, and therefore it's reasonable to expect parity to return which will help in the short term. If Basis were 95% of nominal value and you know that the algorithm ensures a return to 100% then actually you're incentivized to buy in, in the knowldge you can make profit lending liquidity. This may not be how it worked, but the idea that the predictable long term mechanism incentivizing short term behaviour isn't without merit.
“The critical insight is that as long as traders expect Basis price to correct [and grow] in the long-term...” which makes a prerequisite out of what they need to demonstrate.
And then there’s the part where they prove that their algorithm works by pretending that their currency behaves like USD does. Of course if your currency behaves like one of the most successful fiat currencies of all time, backed by the most powerful government in the world, then everything will be okay. If my hypothetical elderly Chihuahua dog had the driving ability and limbs of Micheal Schumacher in his prime, then my Chihuahua could turn in some nice lap times at the Nurburgring.
Whitepaper is still up for now. Enjoy. https://www.basis.io/basis_whitepaper_en.pdf