Abstract
Stablecoins promise to bridge fiat currencies with the world of cryptocurrencies. They provide a way for users to take advantage of the benefits of digital currencies, such as ability to transfer assets over the internet, credibly commit to minting schedules, and enable new asset classes, while also partially mitigating their volatility risks. In this paper, we systematically discuss general design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions.
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Notes
- 1.
- 2.
This is one of the reasons the US went off of the gold standard.
- 3.
USDVault for example is pegged to USD but collateralized with gold.
- 4.
There has thus far been no regulatory precedent establishing how much protection end users of stablecoins receive from deposit insurance.
- 5.
Note that USD is not collateralized, and yet it remains stable. However, when the dollar was a fledgling currency it was backed by gold. It was only after extensive global adoption that the backing was gradually eased-off. Additionally, the US government has the infrastructure to support this type of regime. US federal law makes it so that businesses are required to accept US issued currency as legal tender. There are also regulatory and executive agencies that enforce compliance.
- 6.
Note that the user does not necessarily have to redeem the Tether themselves for this reasoning to hold-it is enough to believe that they can sell it to someone else for more than what they paid for it.
- 7.
Saga prices are quoted in terms of SDR, but users can buy using fiat such as USD.
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Appendices
9 Appendix A: Illustration of Stablecoin Mechanisms
Appendix B: Classification of Existing Stablecoins
Name | Peg | Collateral | Collateral Amount | Price & Supply Adjustments | Price Information |
---|---|---|---|---|---|
Carbon | USD | USD | Full | Reserve of pegged asset | Trades |
Tether [65] | USD | USD/Euro | Partial | Reserve of pegged asset | Trades |
TrueUSD [68] | USD | USD | Full | Reserve of pegged asset | Trades |
Basis | USD | None | None | Two coin | Oracle |
BitUSD [12] | USD | BTS | Full or over | leveraged loans | Elected delegates input exchange prices |
Saga [59] | initially SDR, later CPI or none | Basket of Fiat (SDR) | Full to partial | Algorithmic market maker | Based on amount of reserve |
Bancor [34] | ETH | ETH | Over | Algorithmic market maker | Based on token balances |
Dai [46] | USD | ETH | Over | Leveraged loans | Median oracle |
Gemini Dollar [23] | USD | USD | Full | Reserve of pegged asset | Trades |
USDC [20] | USD | USD | Full | Reserve of pegged asset | Trades |
AAA Reserve [29] | Avg inflation for G-10 countries | Fiat, fixed income, and loan investments | Full | Determined by by Arc Fiduciary Ltd | Trades and oracle |
DGX [27] | Gold | Gold | Full | Reserve of pegged asset | Trades |
EURS [60] | Euro | Euro | Full | Reserve of pegged asset | Trades |
StableUSD/ Stably/ USDS [36] | USD | USD | Full | Reserve of pegged asset | Trades |
PAX [19] | USD | USD | Full | Reserve of pegged asset | Trades |
White standard [24] | USD | USD | Full | Reserve of pegged asset | Trades |
SDUSD [3] | USD | NEO | Over | Leveraged loans | External oracle elected by SDS holders |
JPM Coin [37] | USD | USD | Full | Reserve of pegged asset | Trades |
USDX [54] | USD | Lighthouse (LHT) | 200%+ | Dual coin variant | Median of exchange prices, validated by users |
Stronghold USD [63] | USD | USD | Full | Reserve of pegged asset | Trades |
sUSD [14] | USD | Synthetix (SNX) | 5x | Leveraged loans | External oracle |
eUSD (Havven) [15] | USD | ETH | Over | Leveraged loans | External oracle |
eUSD by Epay [28] | USD | USD | Full | Reserve of pegged asset | Trades |
NuBits [44] | USD | None | None | Nushareholders vote whether to list more NuBits on an exchange, or offer interest to take NuBits out of circulation | Voting |
Token [67] | USD | USD | Full | Reserve of pegged asset | Trades |
Monerium [69] | One for each major currency | Same as peg | Full | Reserve of pegged asset | Trades |
Reserve [13] | initially USD | initially USD, later other assets | Initially full | Reserve of pegged asset | Trades |
Terra [39] | SDR | None | None | Dual coin | Randomly sample users who vote on price |
Ampleforth [41] | USD | None | None | Supply is expanded or contracted proportional to market cap | Whitelist of trusted oracles |
Augmint [6] | Euro | ETH | 2x | Leveraged loans | Exchanges |
Bridgecoin [25] | USD | ETH | 2x | Leveraged loans +algorithmic market maker | Oracle |
HelloGold [31] | Gold | Gold | Full | Reserve of pegged asset | Trades |
Kowala [4] | USD | None | None | Block rewards increase when price is high and are burned when price is low | Large holders of mUSD(staking token) act as oracles |
x8c [72] | None | Gold, USD, Euro, GBP, JPY, AUD, CAD, NZD, CHF | Full | AI shifts funds across currencies to keep value constant | External oracle |
NOS [50] | USD | USD | Full | Reserve of pegged asset | Trades |
Phi [30] | USD | TBD | Over | Phi is minted when validators issue a loan and burned when the loan is paid back | TBD |
Celo [38] | USD | Celo Gold, BTC, ETH | Variable | Dual coin + algorithmic central bank | Crowd oracle |
Aurora Boreal [42] | USD | ETH and other reserves | Partial | Supply expands when Decentralized Capital issues loans denominated in Boreal and contracts when loans are repaid, users will also receive grants to act as market makers | Unknown |
Stableunit [43] | USD | Cryptoassets | Initially over | Algorithmic market maker | Median oracle |
Rockz [58] | CHF | CHF | Full | Reserve of pegged asset | Trades |
Steem Dollars [62] | USD | None | None | Interest accrues to Steem Dollar holders | Steem Power holders elect oracles |
USDVault [70] | USD | Gold | Full | Reserve of pegged asset, “sophisticated gold hedging process” to maintain peg | Trades |
Globcoin.io [33] | Gold and currency basket | Gold and 15 largest currencies | Full | Reserve of pegged assets, can cash out to any one currency in basket | Oracle |
JCash [8] | USD, KRW and other assets | USD, KRW and other assets | Full | Reserve of Pegged asset | Trades |
Staticoin [61] | USD | Eth | Full | Dual coin variant | 24h exchange price |
Unum [66] | USD | Cryptoassets | Under to over depending on prices | Algorithmic market maker: users sell crypto or Unum to smart contract | External oracle |
Poly [32] | None | Tokenized commodities | Full | Reserve of pegged asset | Trades |
BitBay [10] | None | None | None | Freeze and unfreeze tokens based on transaction and staking history. Users receive interest on frozen coins | Dynamic Peg oracle |
BitCNY [12] | Chinese Yuan | BTS | Full or over | leveraged loans | Elected delegates input exchange prices |
EOSDT [26] | USD | EOS | Over | Leveraged loans | Oracle |
Neutral [51] | USD | Other stablecoins (PAX, TUSD, DAI, and USDC) | Full | Reserve of pegged asset | Trades |
Candy [11] | Mongolian Tugrik | Mongolian Tugrik | Full | Reserve of pegged asset | Trades |
Onegram [52] | Gold | Gold | Full | Reserve of pegged asset | Trades |
Carats.io [17] | Diamonds | Diamonds | Full | Reserve of pegged asset | Trades |
Libra [45] | Collateral basket | Bank deposits and short-term government securities | Full | Reserve of pegged asset | Trades and oracle |
Anchor [5] | Monetary measurement unit | None | None | Dual coin | Oracle |
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Moin, A., Sekniqi, K., Sirer, E.G. (2020). SoK: A Classification Framework for Stablecoin Designs. In: Bonneau, J., Heninger, N. (eds) Financial Cryptography and Data Security. FC 2020. Lecture Notes in Computer Science(), vol 12059. Springer, Cham. https://doi.org/10.1007/978-3-030-51280-4_11
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