www.STABLE-BITCOIN.com  TM
 Stable-coins are a unique subset of crypto currency.
Unlike Bitcoin, and other similar crypto-currencies, stable-coins attempt to maintain a fixed,
or “pegged” exchange rate, in which their value is fixed against the value of another currency
or asset with the aim of maintaining stability in value.

 


STABLE-BITCOIN.com - Minimal offer is $80k-100,000 + $30,000 for a second deposit
YOU'll get over 100,000 partial bitcoin from John Mr.BITCOIN check Johnsbitcoin.com
THE BLOCK of STABLECOIN 
EACH EQUAL TO $1 US DOLLAR

Fiat-backed stablecoins

Fiat-backed stablecoins are designed to mirror the value of traditional currencies like dollars and euros and are by far the most popular category. Their issuers claim that they maintain a reserve of liquid assets to back their stablecoin on the blockchain. Ideally, they hold their reserves in cash or cash equivalents such as treasuries, which should match or exceed the circulating supply of their stablecoin. Tether’s USDT and Circle’s USDC are prominent examples of fiat-backed stablecoins.

Fiat-backed stablecoins are commonly used for trading, remittances, and lending and borrowing activities within the decentralized finance sector. However, these stablecoins are centralized, their reserves may include volatile and risky assets, and the absence of independent third-party audits presents additional risk. Nevertheless, the popularity, liquidity, and resilience against price manipulation of fiat-backed stablecoins underscore their importance within the crypto currency space.

Crypto-backed stablecoins

As their name suggests, crypto-backed stablecoins are backed by crypto currencies held as collateral. However, due to the volatile nature of crypto currencies, crypto-backed stablecoins typically require over-collateralization to a specific ratio to ensure stability. For instance, a collateralization ratio requirement of 150% means a user needs to deposit $150 worth of crypto to mint $100 of a stablecoin. The top example of a crypto-backed stablecoin is MakerDAO’s DAI, currently the largest crypto-backed stablecoin by market capitalization.

Crypto-backed stablecoins are decentralized and trustless but aren’t free from risks. Fluctuations in the collateral supporting these stablecoins have the potential to disrupt their peg, and if prices crash, automatic liquidations into the underlying collateral might take place.

Algorithmic stablecoins

Algorithmic stablecoins leverage algorithmic and incentive mechanisms to maintain their price stability. Unlike fiat-backed stablecoins, which are collateralized, or crypto-backed stablecoins, which are over-collateralized, algorithmic stablecoins often operate under-collateralized. This means they don't rely on a reserve of assets for their value.
The stability of algorithmic stablecoins is heavily dependent on market demand. If demand decreases below a certain threshold, the entire system can falter. That’s exactly what happened last year when the TerraUSD stablecoin experienced a significant de-pegging event when its price fell below $1, leading to a massive sell-off and a consequent drop in the price of Luna, the governance token of the Terra blockchain system. The Terra-Luna collapse wiped out over $40 billion in investor wealth in a matter of days in May 2022.

Despite these potential downsides, the transparency and decentralization offered by algorithmic stablecoins can be attractive to some users, as their operations are governed entirely by auditable code.

Finally, there are some asset-backed stablecoins, such as Paxos Gold and Tether 

 Gold, that claim to be backed by physical reserves of precious metals, providing stability through tangible assets. 

Yogita Khatri

Yogita Khatri is a senior reporter at The Block and the author of The Funding newsletter. As our longest-serving editorial member,
Yogita has been instrumental in breaking numerous stories, exclusives and scoops.

 

(c) by John 310-Mr.INTERNET.run since 1994
call 310-Mr.INTERNET or 310-320-2226 12n to 12m PST



 

What is a stablecoin?
Let’s start with what is a stablecoin: it’s a type of cryptocurrency that maintains a fixed value, such as a 1:1 ratio with the US dollar. These are supposed to be backed 1:1 by the US dollar, and there is some debate as to which stablecoins most faithfully hew to this requirement.

The two biggest stablecoins according to www.Coinmarketcap.com are Tether (with a market cap of $23 billion) and USDC ($3.2 billion).
There’s also Binance USD and True USD, which are smaller US dollar-backed stablecoins, but well supported within the crypto community.
These originated within the crypto community as a way for crypto owners to park their wealth in a stable form of value, for example, when traders expected a drop in crypto prices. It allowed them to remain within the crypto realm without having to off-ramp into fiat currencies, which comes with costs. Let’s say Bitcoin had run up 50% and you feared a drop was coming, you could protect yourself by selling the Bitcoin and buying a US dollar-backed stablecoin, then wait on the sidelines for the next opportunity to buy back into Bitcoin.

Transmitting value over the Internet
The big improvement stablecoins offer over traditional forms of money is the ability to transmit value across the internet. In the early days of the internet, we had the ability to transmit text, photos, emails, and then videos over the internet. The next leap was the ability to ship value across the internet. Enter stablecoins and crypto more generally.

 

thx . . .