STABLECOINS, THE SPINAL CORD TO NON-VOLATILITY.

STABLECOINS, THE SPINAL CORD TO NON-VOLATILITY.

October 18, 2021

Stability is the strength and pride of any organization, currency, individual, government or even investment. The economically stable nations pride themselves in their economy, currency, manpower and even military might.There are assets that stand tall in the midst of global economic downturn, these assets are not volatile, and hence, they withstand the denudating and eroding economic tsunamis. Just like gold and the buck, these assets are much strong that mild and even harsh economic crashes tend not to sway them much.

In this article, we will be taking a parabolic view into the stablecoins.  What actually do the stablecoins entail?

Stablecoins are cryptocurrencies by which their values are tied or pegged to stable assets or commodities.

The advantages of asset backed cryptocurrencies are that stablecoins are calmed by assets that oscillate outside of the cryptocurrency space, that is, the principal asset is not linked, thereby reducing financial hazard.Backed stablecoins are in the same vein prone to the same volatility and danger inherent with the backing asset. Note that, if the backed stablecoins is backed in a distributed ledger, then they are comparatively safe from been devoured by economic predators, but, hence there is a central treasury, they may be pickpocketed, manipulated or even loose fidelity.

Commodity backed cryptocurrencies have their values fixed, and are redeemable on demand; the amount of commodity used to back the stablecoins must reflect to the actual circulating supply of the stablecoins. Mention must be made that holders of asset-backed stablecoins can reclaim or redeem their stable coins at the current exchange or conversion rate in other to take full control of the real assets.The rigidity and stability of stablecoins are ultimately ensured by the fortification and storage of the asset or commodity upon which they are pegged to.

Cryptocurrencies backed by fiat are most pronounced and dominant forms of stablecoins in the market. For the crypto fiat backed stablecoins, they are usually attached or pegged to the US dollar, Swiss franc and Euro in a ratio that is fixed. Also, the amount of fiat use to back the stablecoin must also reflect to the circulating supply of the stablecoins. For instance, these pairs are few stablecoins backed by fiat; USD tether(USDT), USD COIN(USDC).

The worth of the stablecoin is collateralized by another cryptocurrency, the pair or peg is validated on-chain through start contracts, the supply of the stablecoin is also regulated or controlled on-chain using smart contract. Hence, the price stability which is their uniqueness is achieved via auxiliary apparatuses and motivations, not only the insurance.

As at the time of putting up this article, the market capitalization of stablecoins is standing at One Hundred and Thirty Billion, Seven Hundred and Sixty Million, One Hundred and Seventy Eight Thousand, Eighty Eight dollars ($ 130,760,178,088.00), hence, their trading volume as this same time is Seventy Four Billion,Two Hundred and Ninety Three Million,Nine Hundred and Seventy One Thousand, Two Hundred and Eighty Three dollars($ 74,293,971,283.00) (www.coimarketcap.com)

 

Some crucial examples of stablecoins include but no limited to:

*thether(USDT)

*USD coin(USDC)

*Binance USD

*DAI

*Terra USD

*Trueusd UST

*Paxdollar USDP

*Neutrino USD

*Husd

*Reserve Rigts RSR

*Fei Protocol

*Liquity USD

*Tribe

ETC.

According to coinmarket capitalization, there are over sixty stablecoins in the market.