Stablecoins
Diagrams | Matrices | Thinkers
When will stablecoins become the dominant method of payment?
Stablecoins are room-temperature superconductors for financial services. Thanks to stablecoins, businesses around the world will benefit from significant speed, coverage, and cost improvements in the coming years. - Patrick Collison
Marketplace
Mechanisms from safest to riskiest.
| Mechanism | Provider |
|---|---|
| Fiat Backed | Tether |
| Fiat Backed | USDC |
| Commodity-backed | DAI |
| Algorithmic | FRAX |
| Synthetic Dollar | Ethena |
Definition
Stable unit of accounting; Borrowed trust from tradFi for fiat-backed stables; Target peg is intuitive due to historical precedent.
Principles
Most stablecoins are pegged to the USD due to its status as a global reserve currency.
Stablecoins are usually minted or burned based on a collateralisation ratio of a basket of assets. These assets determine the trust assumptions of the stablecoin and can range from fiat/assets being held in a tradFi account (USDC, USDT, PAXG) or crypto assets/tokens (DAI, TUSD, FRAX). Stablecoin protocols are able to set a target collateralisation ratio in order to drive capital efficiency.
Payment Adoption
Who is leading the charge towards the adoption of crypto payment rails as native primitives of trade and commerce.
| Platform | Notes |
|---|---|
| Stripe | 1 billion purchase |
| Visa | |
| Shopify |
See Web Payments for more
Protocols
Tether
Not regulated.
Ethena
The Future of Stablecoins & Synthetic Dollars?
Progression.