Decentralized Stablecoins and Diversified Collateral (We’ll Explain)
TL;DR
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Decentralized stablecoins are ruled by a choose group of individuals (i.e. a DAO), are backed by quite a lot of crypto and Actual World Asset’s, and are saved at $1 always by permitting computer systems to stability their worth.
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A couple of months in the past, DAI was backed with 50% USDC – however that is been decreased proper all the way down to 23.6% now.
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So if any single crypto or RWA crashes, it will not take down DAI with it.
Full Story
Let’s speak about decentralized stablecoins.
Centralized stablecoins are backed with an equal in fiat (i.e. the US Greenback) or ‘actual world property,’ (RWA’s).
$1USD = $1 for a centralized stablecoin like USDC.
Decentralized stablecoins then again, are ruled by a choose group of individuals (i.e. a DAO), are backed by quite a lot of crypto and RWA’s, and are saved at $1 always by permitting computer systems to stability their worth.
(Maintain studying, we’ll clarify).
DAI, which is ruled by MakerDAO, is the biggest decentralized stablecoin with a present market cap of ~$4.6 Billion.
A couple of months in the past, DAI was backed with 50% USDC – however that is been decreased proper all the way down to 23.6% now.
Which is nice information!
Whereas USDC can also be a stablecoin, it is finally run by a centralized group, Circle.
Any time a decentralized asset is fully depending on a centralized entity (or asset), there are enormous dangers concerned.
As a substitute of the pie chart representing DAI’s collateral being 50% USDC, now it seems extra like this:
