Smart contract capabilities are rendering old-school megalithic crypto projects obsolete as blockchains evolve beyond just being a medium of exchange.
One of the hindrances to mainstream cryptocurrency adoption is price volatility, as these assets are freely traded in the open market without central administrators tasked with maintaining price stability. The anticipation of potential losses and gains has hindered cryptocurrency’s use as a medium of exchange. Stablecoins, however, are cryptocurrencies designed to maintain a stable value over time, making them ideal for commercial transactions.
The introduction of stablecoins in the cryptocurrency market ushered in a new wave of liquidity, as exchanges were able to provide trading pairs with tokens representing traditional fiat currencies.
Stablecoin design takes many different forms, each with its own tradeoffs:
- Reserve-backed stablecoins: Cryptocurrencies pegged to the value of a fiat currency held in reserve by a company or consortium. E.g., Tether (USDT), USD Coin (USDC) and Paxos Standard (PAX).
- Collateralized stablecoins: Tokens backed by other cryptocurrencies that retain a one-to-one value with a fiat currency through over-collateralization to absorb potential volatility of the underlying assets. E.g., Dai and BitUSD.
- Algorithmic (seigniorage supply) stablecoins: Rather than using a reserve or collateralization to maintain a stable value, these stablecoins are facilitated through an automated expansion and contraction of the monetary supply, emulating the role of central banks in the fiat economy. E.g., Basis.
While Tether’s dominance has fallen to 56%, USDC and BUSD have surged to 23.9% and 10.4%, respectively.5614
Gold and crypto are often described as an “either or” proposition, but this project aims to give investors the opportunity to gain exposure to both.2944
RGT, CRV and SNX saw double-digit rallies after new governance proposals and migrations to layer-2 platforms.4703
Treasury officials are studying the risks if too many people decide to withdraw their stablecoins all at once.5310
LUNA price rallied to a new high above $45 following the launch of the “Project Dawn” funding initiative and the upcoming Columbus-5 mainnet upgrade.9597
Diem’s push to launch stablecoins and a global payment system might suffer from the seemingly brewing anti-crypto sentiment among key U.S. policymakers.4573
Institutional investment, new governance features and a groundbreaking project with the government of El Salvador are just a few of the factors behind ALGO’s rally to a new all-time high.30259
Crypto traders flocked to the safety of stablecoins during Tuesday’s market crash.14236
Afterpay spoke as part of the Senate inquiry into “Australia as a Technology and Financial Center” and Lee Hatton said there would be enough consumer demand to offer crypto services.3183
In our latest video report, Cointelegraph addresses the systemic risk posed by stablecoins.6655
Afterpay told the Australian Senate that using crypto could cut payments costs for merchants and that the government should work to create a framework for an AUD-backed stablecoin.6756
The Massachusetts senator said that it’s “worth considering” banning U.S. banks from holding the reserves to back private stablecoins.6967
“Stablecoins are pretending to be a coin, but in fact it’s completely associated with an actual currency,” said Christine Lagarde.4989
SEC Chairman Gary Gensler promoted cooperation between Europe and the United States in seeking to regulate decentralized financial technologies.10155