mev-toolkit/defi_and_trading/stablecoins

stablecoins

tl, dr

fiat-collateralized stablecoins

• 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.

cryptocurrency-backed stablecoins

• 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. '

decentralized (algorithmic) stablecoins

• 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.

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in this dir

• curve
• dai
• (rip) ust

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resources

• stablecoins by the ef
• the rising of protocol native stablecoins, by easonwu