Stablecoins

Stablecoins address cryptocurrency volatility by maintaining steady value, typically pegged to traditional currencies like the US dollar.

Major Types

• Fiat-Collateralized: Backed by currency reserves (USDT, USDC)
• Crypto-Collateralized: Backed by other cryptocurrencies (DAI)
• Algorithmic: Use programmatic supply adjustments to maintain peg

Stablecoins facilitate trading, remittances, and everyday transactions without exposure to price volatility.

Key Functions

• Trading Pairs: Serve as base currencies on exchanges
• Value Transfer: Enable low-volatility cryptocurrency transfers
• Financial Services: Provide accessible banking alternatives
• DeFi Applications: Used for lending, borrowing, and yield generation

Popular Stablecoins

Fiat-Backed

• USDT (Tether): The most widely used stablecoin by trading volume
• USDC (USD Coin): Regulated stablecoin with regular attestations
• BUSD (Binance USD): Stablecoin issued by Binance and Paxos

Crypto-Backed

• DAI: Decentralized stablecoin backed by crypto collateral
• FRAX: Fractional-algorithmic stablecoin partially backed by collateral

Algorithmic

• UST: Formerly popular algorithmic stablecoin (collapsed in 2022)
• AMPL: Rebase token that adjusts supply based on price

Considerations

• Regulatory Scrutiny: Increasing government oversight
• Counterparty Risk: Reliance on issuers to maintain reserves
• Transparency: Varying levels of auditing and disclosure
• Centralization: Many stablecoins have centralized control

Advanced

Example Addresses

• USDT (Ethereum): 0xdAC17F958D2ee523a2206206994597C13D831ec7 (contract)
• USDC (Ethereum): 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48 (contract)
• DAI (Ethereum): 0x6B175474E89094C44Da98b954EedeAC495271d0F (contract)
• USDT (Tron): TKttnV3FSY1iEoAwB4N52WK2DxdV94KpSd (contract)
• USDC (Solana): EPjFWdd5AufqSSqeM2qN1xzybapC8G4wEGGkZwyTDt1v (mint)

Block Explorers

Stablecoins can be viewed on the respective blockchain explorers:

• Ethereum-based: Etherscan
• Binance Smart Chain: BscScan
• Tron-based: Tronscan
• Solana-based: Solscan

Key People

• Tether (USDT):

  • Jean-Louis van der Velde: CEO of Tether and Bitfinex
  • Giancarlo Devasini: CFO of Tether
  • Paolo Ardoino: CTO of Tether and Bitfinex

• USD Coin (USDC):

  • Jeremy Allaire: CEO of Circle (co-creator of USDC)
  • Centre Consortium: Joint venture between Circle and Coinbase that governs USDC

• DAI:

  • Rune Christensen: Founder of MakerDAO
  • MakerDAO: Decentralized organization governing the DAI stablecoin