November 27, 2023
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January 3, 2024
Fiat-backed stablecoins (e.g., Tether, USDC) mimic traditional currencies, serving trading, remittances, and DeFi. Despite popularity, they pose centralized risks and reserve uncertainties.
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MakerDAO's DAI, a crypto-backed stablecoin, ensures stability through over-collateralization, yet is vulnerable to fluctuations while maintaining decentralization and trustlessness.
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Algorithmic stablecoins like TerraUSD operate without collateral, facing market demand vulnerabilities, yet attract users with transparency and decentralization.
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Asset-backed stablecoins like Paxos Gold and Tether Gold secure stability through physical reserves of precious metals, ensuring value is derived from tangible assets.
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Fiat-backed stablecoins serve diverse needs, crypto-backed like DAI balance decentralization with risks, algorithmic coins offer transparency but depend on markets.
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Fiat-backed coins risk from centralized reserves, crypto-backed face disruptions from collateral fluctuations, and algorithmic stability falters with reduced market demand, as seen in the Terra-Luna collapse in 2022.
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Fiat-backed stablecoins are popular, liquid, and resistant to manipulation; algorithmic stablecoins attract users with transparency; asset-backed stablecoins offer stability through tangible reserves.