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A stablecoin is a digital token that is pegged to a certain value, usually in a 1:1 ratio with a fiat currency like the US dollar. For example, the USD Coin (USDC) launched by Coinbase is backed by US Dollars in a 1:1 ratio. Most stablecoins in reality deviate from the $1 position ever so slightly,
Most stablecoins are pegged to a fiat currency, with the US Dollar being a popular choice. However, some stablecoin ventures distinguish themselves by backing their stablecoins with other assets.
An example of this kind of stablecoin is the well known MakerDAO ecosystem, which is a stablecoin ecosystem that consists of two tokens: the stablecoin DAI and the governance/utility token MKR. The stablecoins are backed by Collateralized Debt Positions which demand Ether as collateral. There is a complex mechanism in place to ensure that the token does not deviate from the $1 value.
Stablecoins have been ascending in popularity in discussion in 2019. This is largely because there is some consensus in the idea that stablecoins are effective in combating the volatility of the market. Since the value of these tokens remain stable, investors who use stablecoins do not have to worry as much about bear markets, and can use these tokens to make investments during these bear markets to gain profit.
As most stablecoins are pegged to fiat currency, there has been scrutiny on the finances of stablecoin issuers, who must confirm that they possess the reserves to back the total value of stablecoins. This increased scrutiny has led to calls for more audits and better transparency.
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13 Jun 2021 1 minute read 0 comments drluv
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10 Jun 2021 1 minute read 0 comments Baneb
Stable coinsThe most obvious flaw of cryptocurrency is how fast the price can change (volatility), “Stable coins” were invented to solve this problem and make it much easier to make payments, accrue savings and loan to others. Tether USDT, which al...
10 Jun 2021 6 minute read 4 comments CryptoWingnut
In today’s post, I am going to explore the world of stablecoins. These handy little cryptos are useful as they aim to help curb the volatility in price in the crypto markets and give you a safe haven. They have a number of use cases, and there are a...
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