BiG ChiNEdu(DEX=🪙) 🔎
@BiGChiNEdu
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Talks about Decentralization || Researcher and analyst || Community Expert || CMC/CGC || Collaboration Manager || Graphics designer || co-founder Creators_Quest
WEB 3
Joined December 2019
My goal is to teach you what that paid class won't teach you. Do you know that 99% of newbies and even some old timers assume stable coins as a means of owning USD without a dollar account. The reality is that it's really far from what stablecoins are all about. So what are Stable Coins? Let's get into it. Stable coins are cryptocurrenies designes to be less volatile than other cryptocurrenies by pegging them to the value of a more stable asset. They were birthed for the sole purpose of providing stability, which is essential in many ways, e.g, daily transactions, savings , lending, borrowing, etc. Now that you understand what stable coins are.. Let's move on to the types of stable coins we have. Types of Stable Coins There are three major types of stable coins. They are classified based on how they are collaterized in the sense that every stablecoin is collaterized. When a developer launches a stablecoin, they have what they call a reserve, which is always above or equal to the total supply. In the sense that when you hold 1 $USDT, $1 is redeemed from the reserve. It sounds complicated, right? Let me break it down. So we have: 1. The Fiat Collaterized Stablecoin 2. Crypto Collaterized Stablecoin 3. Commodity Collaterized Stablecoin 4. Algorithmic Stablecoin •Fiat Collaterized Stablecoin: These stable coins are backed by a fiat currency reserve. Fiats are currencies like dollar, euro, naira, and co. These stablecoins are pegged mostly to the price of the reserved currency. For example, the $USDT is collaterized by a fiat reserve, and with a 1:1 ratio to the USDollar, at a total supply of 1.2bn $USDT, there's a 1.2bn USD in reserve. Other examples include TrueUSD ( $TUSD) and Circle's USD coin ( $USDC) •Crypto Collaterized Stablecoin: These stable coins are backed by cryptocurrency reserves. You must have heard of wrapped bitcoin, wrapped eth, wrapped bnb, and other tokens getting wrapped to a token on another chain. These are also stablecoins because they maintain the price of the token they are wrapped to. Some crypto collaterized tokens are also pegged to the USDollar, like $DAI, which is collaterized by different cryptocurrencies, mostly Ethereum. Now, for wrapped tokens, the supply of the main token is being held in a reserve wallet to make redeeming possible. Examples include $DAI, wrapped bitcoin, wrapped Ethereum, etc •Commodity Collaterized Stablecoin: These stable coins are backed by reserves of physical commodities like gold. Just like the Fiat Collaterized stablecoins, these stablecoins are backed by a reserve of physical commodities (gold). A significant amount of gold is being held in a vault for the sake of redeeming. These tokens are pegged to a Troy ounce of gold, which means that when you buy a unit of the token, you automatically own a Troy ounce of physical gold in the vault. Examples include $XAUT and $PAXG Don't be surprised 😒. Moving on... •Algorithmic Stable Coins: These stable coins aren't backed by reserves. Instead, they rely on mathematical algorithms and economic incentives to achieve stability. In this case, a smart contract is set, and when the price goes beyond the pegged price, supply is increased, and when the price dunks below the pegged price, supply is burnt to meet up. In most cases, algorithmic stablecoins are backed by both reserves and algorithms. In this one, they tend to reduce the risk involved in an algorithmic way of stabilizing coins . Examples include Frax and TerraUSD ( $UST). These two are backed by both algorithms and crypto reserves. $DAI is also partially backed by algorithms. Now that you understand the types of stable coins. Why are they important? Walk with me....
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@AKDEGEN0 Back to the grind, I'm glad you lost, alpha would have reduced since you will always be preoccupied 😅😅. Win soon🙂↕️🙂↕️
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@lifeofolaa The price of a used version is $523k, una just get too much talk for mouth with zero research
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