Anzen Finance's USDZ stablecoin has recently experienced depegging, placing it on the list of unstable stablecoins. Let’s explore the reasons behind this:    

Why did an encouraging project fall?

     Anzen Finance allows users to stake and earn passive income with USDZ tokens, making it an attractive stablecoin. Additionally, USDZ is backed by Circle Ventures, a significant name in the stablecoin space. However, the depegging of USDZ demonstrates that even strong enterprise support and incentivising participation are not enough—something is amiss. 

There is a flaw in the project

     Analysts may argue that stablecoins should be backed by real, liquid assets. Upon further examination, I found that USDZ has a total supply of about 120 million and is backed by $122 million in real-world assets (RWA), including cash, cash equivalents, and a credit portfolio of private assets. The analysts' point stands, but there seems to be a flaw somewhere. 

Privacy is the reason

     My research (DYOR) reveals that the majority of USDZ's RWA is selected through processes that involve only KYC-compliant investors, i.e., no privacy is the main process. Now, who will explain to these people that privacy is a core principle of the cryptoverse? If the sponsors themselves oppose privacy, no one will be keen to trust them.      

Originally published at Wubits as thread