Stablecoins — crypto market needs them?
Not all of the coins available on the market are the custom crypto projects giving some functionalities like ethereum or bitcoin. However…
Not all of the coins available on the market are the custom crypto projects giving some functionalities like ethereum or bitcoin. However, to buy a coin it is required to make a pair to stablecoin, which is strictly connected with FIAT currency.
Agenda
- intro,
- what is it?
- how it works?
- types,
- conclusion.
What is it?
Stablecoin is a cryptocurrency which price is pegged to the asset it refers, dollar Stablecoin should be worth always 1 dollar.
How it is achieved, is it always equal to the unit of referred FIAT currency?
Stablecoins can have some value fluctuations, so it is not always 100% equal to the referred asset. It is a cryptocurrency which should be distributed from the business entity basing on the accumulated coverage.
Some of the entities does not have 100% coverage, so the liquidity is not stable, peg can fluctuate or even collapse like it happened with algorithmic Stablecoin made by terra.
How it works?
Stablecoins most important target is to estimate peg to the referee asset value, it can be done by planning the tokenomics wisely and distributing only covered tokens.
More about tokenomics:
Types of Stablecoins:
- Fiat-collateralized stablecoins,
- Crypto-backed stablecoins,
- Non-collateralized stablecoins,
- Commodity backed stablecoins,
Conclusion
Stablecoins have a great impact on mass adoption of cryptocurrencies and daily basis trading/investing. Keeping FIST assets in decentralized way can be found as a huge advantage, the same with transferring, swapping coins.
However, it is extremely important to review how the coins are covered. In every industry there are some frauds, who can create a scum, do not provide liquidity, etc.
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