stablecoin

[wilkine]

In the early years of stablecoin development, they were categorized into centralized stablecoins backed by real-world assets, initial centralized stablecoins acting as tools for cryptocurrency trading, and stablecoins pegged to various real tokens like RMB.  Another type emerged, the algorithmic stablecoins, which primarily rely on algorithms to maintain price stability without anchoring reserve assets.

However, the credibility of algorithmic stablecoins was questioned after Luna Thunder, a once-prominent algorithmic stablecoin, plummeted to zero due to liquidity issues.  As a result, the industry has shifted towards more reliable forms of stablecoin development, combining excess mortgage, multiple asset collateral, and fusion algorithms.

While centralized stablecoins still dominate the market, there is a growing demand for decentralized stablecoins due to the increasing need for anti-censorship.  The decentralized stablecoin industry has evolved from focusing solely on algorithm stability to embracing a combination of excess mortgage, multi-asset collateral, and algorithms.

AAVE is not the only lending protocol introducing native stablecoins;  Maker Dao, Curve, Synthetix, and others have also done so.  These stablecoins usually utilize a combination of excess collateral and algorithmic stability, making it difficult to classify them under a specific category.

Previously, algorithmic stablecoins were considered the industry's gem, but their vulnerability to "death spirals" raised concerns.  Therefore, a combination of mortgage and algorithm, often using mainstream crypto assets or real-world assets as collateral, appears to be a more practical approach.

GHO, for instance, operates based on collateral from various cryptocurrencies and follows a similar logic to Maker Dao's stablecoin Dai.  It introduces the concept of a "central bank" or "facilitator," which can intervene when the stablecoin becomes unanchored.  While this design has advantages, it also raises concerns about centralization.

Launching stablecoins within lending protocols has become a popular trend, driven by the potential for significant profits and the increasing demand for stablecoins.  The introduction of stablecoins, like GHO, enhances the competitiveness of protocols and opens up opportunities for users to participate in governance and benefit from discounted interest rates.

Different lending protocols have introduced their stablecoins with unique characteristics.  Maker Dao, for example, incorporates an on-chain and off-chain mortgage asset model with its RWA, while CRV Finance introduces dynamic lending clearing algorithms for its crvUSD stablecoin.

As the stablecoin track evolves, classification solely into the original three types is no longer sufficient.  Today's stablecoins combine both online and offline asset mortgages with various algorithms.  The industry has proposed categorizing stablecoins as "centralized stablecoins" and "decentralized stablecoins," but even decentralized stablecoins can have centralized elements.

Ultimately, stablecoins play a crucial role in DeFi, offering asset preservation and unique opportunities for protocols and users alike.