$192.41 0.50%
ETH · 27w

Stablecoins: Strengths & Weaknesses -- The Maker Blog

Contributed by @BrianDColwell.

Previously in Part 1: Stablecoins: Use Cases

“Price instability and market speculation have contributed to extreme volatility in cryptocurrencies, creating an ecosystem that is not supportive of vital financial functions. For there to be a modern financial system on the blockchain, there needs to be a stable medium of exchange. There needs to be transparency and accountability, as well.”

Previously in Part 2: Stablecoins: Collateralization Types

“A successful stablecoin implementation would be a major catalyst for disruption to global financial infrastructure, challenging weak governments and mismanagement of national economies. Furthermore, stablecoins allow for decentralized insurance, prediction markets, transparent credit and debt markets, and create a level playing field between small and large businesses in global finance.”

But not all stablecoins are created equal…

With a total addressable market of ALL the money in the world, a fiat-free, digital currency that’s price stable, such as Dai from MakerDAO, represents the opportunity to finally end hyperinflationary policies, economic controls, and mismanagement of national economies by weak governments around the world.

Now let’s explore the strengths and weaknesses of the various types of stablecoins.

Part 3: A brief explainer on stablecoin strengths & weaknesses

The first issue with which all stablecoins must first contend is referred to as “the oracle problem.” This issue revolves around transparency of market conditions and ease of acquiring information about the exchange rate between the stablecoin and the asset against which it is pegged.

There are three primary approaches to resolving this problem:

Use a trusted data source, a centralized solution Use the median from a set of data feeds, also a centralized solution Use a Schelling point scheme, a decentralized solution

The best understood solut...

Continue on
Recent news
ETH +0.50% · · 3h

First Look into Compound Finance

This will be the first product that I will be reviewing as it has established itself as a pioneer of Decentralized Finance. Compound Finance is an open-source money market protocol built on the…
ETH +0.50% · · 3h

Ryan Sean Adams: ETH isn't fuel, it's currency

Saying ETH is fuel was always wrong. Not fuel. It's currency to buy the fuel The fuel itself is GasGas meters blockspace on EthereumAnd is a tax that pays for securityThe US network demands taxes in U...
ETH +0.50% · · 11h

Market Volatility and Cryptocurrencies

This article explores crypto market volatility, including some of the reasons for volatility, market manipulation, misconceptions, and more.