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TL;DR
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.
A number of months in the past, DAI was backed with 50% USDC – however that is been diminished proper right down to 23.6% now.
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 belongings,’ (RWA’s).
$1USD = $1 for a centralized stablecoin like USDC.
Decentralized stablecoins alternatively, 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 number of months in the past, DAI was backed with 50% USDC – however that is been diminished proper right down to 23.6% now.
Which is nice information!
Whereas USDC can be a stablecoin, it is in the end run by a centralized group, Circle.
Any time a decentralized asset is solely 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 to be extra like this:
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