🧵The Stablecoin Trilemma: An Unavoidable Challenge:

Stablecoins are designed to maintain a stable value, but they face a difficult trilemma: stability, decentralization, and efficient capitalization. Why is it so hard to check all the boxes?

Let’s explore this concept.

2/8 - Stability

Stablecoin users seek guaranteed stability, often pegged to a fiat currency like the dollar. This is the main goal, but achieving it sustainably while remaining decentralized poses major challenges.

3/8 - Decentralization

For many crypto players, decentralization is essential. But most reserve-backed stablecoins (like USDT) are controlled by centralized entities, which goes against the crypto philosophy.

4/8 - Capital Efficiency

Capital efficiency refers to the ability of a stablecoin to maintain its stability without having to overcollateralize (hold more assets than issued stablecoins). Too low an efficiency can lead to high costs or risky undercollateralization.

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