Stablecoins
Decentralised digital money.
Stablecoins or crypto dollars exist to facilitate trade. The underlying importance is decentralisation, meaning no single authority that can be the target for corruption or coercion.
📄️ DAI
Ethereum based stablecoin governed by Maker DAO
📄️ FRAX
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📄️ USDC
Details
Stable unit of accounting; Borrowed trust from tradFi for fiat-backed stables; Target peg is intuitive due to historical precedent
List of all stablecoins on Defi Llama.
Principles
Most stablecoins are pegged to the USD due to its status as a global reserve currency.
Macroeconomic and political factors will likely result in a multi-stablecoin future as nations vie for liquidity.
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.
Protocols
Mechanisms from safest to riskiest.
| Mechanism | Provider |
|---|---|
| Fiat Backed | Tether |
| Fiat Backed | USDC |
| Commodity-backed | DAI |
| Algorithmic | FRAX |
| Synthetic Dollar | Ethena |
Tether
Problem
Ethena
The Future of Stablecoins & Synthetic Dollars.
Adoption
- Visa
- Shopify