Let's take a look at several different modes of stablecoins

Those who know know that the first step to enter cryptocurrencies is to exchange fiat currency for stablecoins, that is, to buy U. But there are several other modes of stablecoins. Let's not talk nonsense, let's get to the point.

1. Cryptocurrency collateral type: Provide value support by over-collateralizing crypto assets to cope with the high volatility of the crypto market. This type of stablecoin is usually managed by smart contracts and has decentralized characteristics.

For example, MakerDao's $DAI. This type of stablecoin is highly decentralized and more transparent. However, since this type of stablecoin is often backed by collateralized assets, when the collateralized assets fluctuate too much, the value of the collateral may quickly fall below the collateral requirements. This leads to the execution of liquidation by smart contracts.  

2. Algorithmic stablecoins: No collateral assets are required, but market supply and demand are dynamically adjusted through algorithms and smart contracts to maintain price stability.

For example, TerraUSD, this type of stablecoin often does not require collateral assets, but is autonomously regulated by algorithms, which is more flexible and decentralized. However, price fluctuations are often large, and when market confidence is shaken, it is easy to collapse, causing a crash.

3. Commodity-collateralized: The value of stablecoins is supported by physical assets (such as gold and oil) as collateral. For example, $PAXG $DGX. This type of stablecoin is collateralized by physical assets, anchored to the stable value of commodities, and can hedge the risk of fiat currency inflation, but liquidity is often very low, and management is very complicated, involving physical security storage and regular audits. 4. Hybrid stablecoins: Combining the characteristics of multiple mechanisms, there may be collateral assets and algorithms to control supply and demand. #稳定币铸造 #稳定币