In its simplest form, a ‘stablecoin’ is a digital asset, on a blockchain, that is designed to maintain a consistent value, typically by linkage to the value of another asset.
Presently, there are 4 ways to design a stablecoin:
- Algorithmic (derives value from a separate token specific to the stablecoin
- Commodity Collateralized (derives value from a commodity, e.g., Gold)
- Cryptocurrency Collateralized (derives value from other cryptocurrencies, e.g., ETH, BTC)
- Fiat Collateralized (derives value from a fiat currency, e.g., USD, EUR)
Tether (USDT) versus TrueUSD (TUSD)
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