Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => DeFi tokens => Topic started by: ushikaneko on April 12, 2022, 05:32:59 AM
-
What is a stablecoin?
- A stablecoin is a digital currency that is pegged to a “stable” reserve asset such as the USD. Stablecoins act as a crypto-equivalent to fiat currencies which by nature should be able to reliably hold value without volatility.
- Stablecoins are open, global, accessible to anyone on the Internet, they are fast, low-fee, secure, digitally native to the Internet and programmable.
- Types of stablecoins include: stablecoins with fiat currencies or cash reserves backing them such as USDT, TUSD, USDC, BUSD, stablecoins with cryptocurrencies as collateral such as Dai and stablecoins backed by seigniorage.
- Cryptocurrencies are highly volatile and risky to interact with on a daily basis. Stablecoins solve this problem with cryptocurrencies by bundling and pegging the value of the currency around a specific fiat currency.
- In addition, there is potential legal risks associated with exchanging fiat currencies directly for cryptocurrencies, so stablecoins act as an intermediary to facilitate this procedure.
Importance of stablecoins
1 They create a bridge between traditional finance and decentralized finance.
2 They help investors avoid the risks posed by cryptocurrency volatility. An asset pegged to a more stable currency can give buyers and sellers the confidence that the value of their tokens will not go up or crash unpredictably in the near future.
3 They serve as a stable medium of payment to purchase other digital assets, NFTs, platform memberships, etc.
4 They serve as a stable investment vehicle for investors to earn yield. There are some simple ways to earn interest above what banks offer by putting one’s stablecoins to work
5 They serve as a tool to fight against hyperinflation which is a major problem in some countries. Investors in some of these countries can convert their local currencies to stablecoins pegged to other foreign currencies like the dollar or euro.
6 They facilitate borderless transactions while maintaining their value.
The role of Sirius Finance on Astar network
- Currently on the Astar network, there is a lack of deep liquidity to address volatility and yield farming opportunities for most stablecoin holders and the lack of a DEX for stablecoins limits arbitrage opportunities. The need to transact between different and large amounts of stablecoins on Astar network creates the need for a stable and secure AMM — -Sirius Finance.
- Low Slippage Stablecoin AMM: resulting in a better price for bigger volumes. If one wants to perform significant volume trades, one needs better liquidity which ensures less or low slippage. Sirius Finance’s formula is designed to minimize slippage as much as possible. This leads to extremely low slippage for even large amounts of trades. In fact, the spread on Sirius Finance can meaningfully compete with some of the centralized exchanges and OTC desks with the best liquidity.
- Reducing impermanent losses: impermanent loss occurs as a result of depositing two cryptocurrencies into the liquidity pool of an automated market maker (AMM) and withdrawing them at a later time with a difference in value, less than you would get if you held the coins in your wallet. However, if both cryptocurrencies are stable coins, the impact of impermanent loss can be minimized.
About Sirius Finance
- Sirius Finance is the first Polkadot-native stablecoin AMM on Astar Network. Our mission is to provide a stable, highly liquid trading platform for stablecoins, deep liquidity for connected protocols, attract and lock tremendous value to facilitate more innovations and collaborations for Astar and Polkadot.
Join Sirius Finance by joining Twitter, Discord and Telegram now :
* Official website : Sirius.Finance
* Twitter : @Sirius_Finance
* Telegram :@Siriusfinanceofficial
* Medium : @Siriusfinance