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Redefining Stablecoins from Nominal to Real Value: A Maximum Likelihood Approach

Author

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  • Tomonori Kanno
  • Kensuke Ito
  • Yushi Yoshimura
  • Kyohei Shibano

Abstract

Stablecoins, typically pegged to fiat currencies, cannot achieve true stability because they inherit fluctuations in the underlying unit of account. To overcome this limitation, we introduce a stablecoin pegged to the Maximum Likelihood Value (MLV), a newly defined unit of account derived as the most probable configuration of latent real-value movements that explains observed nominal-value (price) changes. Grounded in inferential statistics and modern portfolio theory, MLV represents the most stable unit of account, as it enforces a zero real return on the minimum-variance portfolio. Empirical results confirm the operational viability of an MLV-pegged stablecoin: MLV can be computed in real time from 500 asset price series and improves annualized returns and Sharpe ratios while substantially reducing turnover in portfolio optimization.

Suggested Citation

  • Tomonori Kanno & Kensuke Ito & Yushi Yoshimura & Kyohei Shibano, 2026. "Redefining Stablecoins from Nominal to Real Value: A Maximum Likelihood Approach," Papers 2608.30225, arXiv.org.
    • Handle: RePEc:arx:papers:2608.30225
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    File URL: https://arxiv.org/pdf/2608.30225
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