From 6f0d49fa7ab9171f73b1289cc06529974e2b9290 Mon Sep 17 00:00:00 2001
From: "dr. mia von steinkirch, phd"
 <1130416+mvonsteinkirch@users.noreply.github.com>
Date: Thu, 9 Feb 2023 12:12:27 -0800
Subject: [PATCH] Create stablecoins_101.md

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+## stablecoins 101
+
+<br>
+
+#### fiat-collateralized stablecoins 
+
+<br>
+
+* fiat-collateralized stablecoins are stablecoins that are backed by fiat currencies like the US dollar. 
+* Their reserves are held by a central entity. The most popular fiat-backed stablecoins at this time are USDC, USDT, and BUSD. 
+* The main weakness of fiat-collateralized stablecoin is centralization as the collateral of a fiat-collateralized stablecoin is held by one independent party.
+
+<br>
+
+#### cryptocurrency-backed stablecoins
+
+<br>
+
+*  This motivated the development of more decentralized, cryptocurrency-backed stablecoin. 
+*  The main player in this category today is MakerDAO’s Dai stablecoin.
+*  While crypto-backed stablecoins are good for their decentralization, they are capital inefficient. '
+
+<br>
+
+#### decentralized (algorithmic) stablecoins
+
+<br>
+
+*  The average consumer or institutional investor would rather mint 1:1 through a centralized fiat stablecoin than have to over-collateralize by at least 150% to issue a decentralized stablecoin. 
+*  For this reason, developers set out to create non-collateralized (or algorithmic) stablecoins. 
+*  These coins maintain their peg without having to directly collateralize the issuance. 
+*  The two largest forces in the market in this category are Terra and Fei.
+
+<br>