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.
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.
Predictions
Macroeconomic and political factors will likely result in a multi-stablecoin future as nations vie for liquidity.
See predictions
Payment Adoption
Who is leading the charge towards the adoption of crypto payment rails as native primitives of trade and commerce.
See Web Payments for more
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.