What is a stable digital currency?
Let us first understand what a stable digital currency is.
A stable currency is a digital currency with an asset as an anchor (dollar, gold, productivity, etc.). Prices are stable compared to other digital currencies (Bitcoin, Ethereum, etc.). Soaring and falling, so it can be used to store value well
What is a stable coin?
- Legal Asset Mortgage Flow - US Dollar
This is the most traditional technical detail - simply mortgage the real dollar to the central agency
USDT is the Tether version number of USD 1:1
The biggest problem with legal asset mortgage flows is that it is almost different from the idea of blockchain decentralization. Security depends mainly on the level of the centralization mechanism. For example, Tether has issued an audit report since September this year. 2.6 billion dollars, so many people use the USDT ratio as a time bomb
The USDT competitors are TrueUSD, DSDC, etc., but the market seems to be in an absolute monopoly.
2.Algorithm Library - Basecoin
This relatively high threshold is relatively difficult to understand and the algorithm for each algorithm is different.
Although the algorithms are different, the basic idea of this type is almost the same. As the aggregate demand for stable digital currencies increases or decreases, the stable supply of digital currencies will expand or tighten.
Basecoin introduces a "securities and stocks" approach, and Basecoin achieves liquidity adjustments through three generations of institutions
Basecoin's competitors Reserve, Carbon Money, Kowala, etc.
3 Digital Asset Mortgage Flow - Bitshare
This type should be the most sensible because it has a blockchain dispersion.
The digital asset collateral model is usually achieved by depositing N times the assets of other digital currencies as collateral for each stable digital currency, as the value of the collateral fluctuates, thus confirming the unit's stable digital currency. There are enough mortgages to ensure N>1.
Because it is a digital asset, you can use smart contracts that are not centrally organized. More transparency. Existing digital currencies have great volatility. Therefore, in order to issue 100USD stability, it is necessary to over-collateralize to issue a stable digital currency, such as ETH 200USD. Even if the digital currency is over-collateralized, if the price of the mortgaged asset falls sharply, there is still a risk of insufficient mortgage value, so it is necessary to design various risk aversion measures.
Most digital asset mortgage flows are based on existing blockchain platforms and are ancillary assets that do not replace existing virtual currencies.
Bitshare competitor MakerDAO, Alchemint, DUO
Coins mentioned in post: