diff --git a/MEV_and_trading/stablecoins/stablecoins_101.md b/MEV_and_trading/stablecoins/stablecoins_101.md index f778c75..6dd4dd5 100644 --- a/MEV_and_trading/stablecoins/stablecoins_101.md +++ b/MEV_and_trading/stablecoins/stablecoins_101.md @@ -7,8 +7,9 @@
* 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. +* their reserves are held by a central entity. The most popular fiat-backed stablecoins at this time are USDC, USDT, and BUSD.  +* their main weakness is centralization as the collateral of a fiat-collateralized stablecoin is held by one independent party. +* e.g., Circle's USDC, iFinex's USDT, and Binances BUSD
@@ -16,9 +17,8 @@
-* 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. ' +* while crypto-backed stablecoins are good for their decentralization, they are capital inefficient (overcollaterized) +* eg: MakerDAO's DAI, Synthetix's sUSD, and Liquity's LUSD
@@ -26,9 +26,8 @@
-* 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. +* they maintain their peg without having to directly collateralize the issuance. +* they rely on supply-and-demand algorithms to maintain price stability 😬. +* e.g., FRAX, RAI and rip FEI and UST