The “naturally” part is interesting...we manipulate money supply partly to hit target inflation rate. Would there be a way to use the ongoing transactions on a blockchain itself to calculate an inflation metric, and then naturally increase or decrease the money supply to keep it around 2-3% or whatever?

>Such that supply can increase or decrease either on command

who would use it? you might as well have tether (or the government backed equivalent)

>or naturally

and what metric do you use determine the "optimal" supply? and how do you prevent that metric from being gamed?

Would be easy to implement, but hard to manage (what if govt loses privkey for printing money?) and build trust (what if next congress decides to stop this currency).