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Stablecoin

Stablecoin

Stablecoins are cryptocurrencies in which the price is designed to be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities (such as precious metals or industrial metals).

Stablecoins are cryptocurrency assets with low volatility built into them and are useful as a trusted medium of exchange or store of value.

Types of stablecoin
IOU

IOU stablecoins are based on a centralized model of authority. The centralized authority is relied upon to be trustworthy and centrally controls an asset and issues stablecoins that are redeemable for that asset.

Seigniorage Shares

Seigniorage Shares are a form of stablecoin that algorithmically expand and reduce the supply of coins issued on the network to maintain a stable currency price. This form of stablecoin is similar to how central banks maintain the stability of fiat currencies.

Collateralization

Stablecoins that use collateralization use on-chain trustless issuance where assets are pledged by users to be used as collateral on the blockchain. Stablecoins using collateralization are stabilized naturally through users using their knowledge over-collateralization, market efficiencies, complimentary incentives, profit motives, fallback procedures, and other market-based information to maintain price stability.

Timeline

Further Resources

Title
Author
Link
Type
Date

An overview of stablecoins

Myles Snider

Web

Maker for dummies: a plain English explanation of the Dai stablecoin

Gregory DiPrisco

Web

Post | Stable Crypto | CementDAO

CementDAO Blog

Web

Post | Stable Crypto | CementDAO

CementDAO Blog

Web

Stablecoin

Adam Hayes

Web

September 19, 2018

References

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