Stablecoins aim to bring together characteristics of crypto native coins including censorship resistant digital transactions and the price stability of traditional financial assets such as the US dollar, oftentimes by pegging their value to an underlying asset
Stablecoins are non-speculative in nature and oftentimes also more centralized than their more volatile counterparts. Presently, centralized stablecoins like Tether, BUSD, and USDC are still dominating the market
Algorithmic stablecoins try to maintain their peg by controlling circulating supply. In an ideal situation, price and supply move simultaneously, allowing the price to stay stable
Due to their nature, algorithmic stablecoins come with a base level of underlying fragility
So far, over-collateralization, meaning collateralized with more than 100%, has proven to be one of the best risk-mitigating factors when it comes to algorithmic stablecoins
Stablecoins are often considered the most viable tool for crypto mass-adoption, integrating real-world payments and applications with the cryptocurrency space
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