Stablecoin is a Fiat $Dollar currency that exists in crypto. Stablecoin is a type of cryptocurrency that is based on certain underlying assets so that its price movements follow the price movements of these assets. Stablecoins generally offer lower price volatility because the underlying asset is fiat money, such as dollars, or euros, or commodities, such as gold. This is because these assets have relatively more stable price movements compared to crypto assets such as Bitcoin.
Stablecoin itself is divided into several types of underlying assets
This type of stablecoin is a stablecoin that makes fiat currency such as $Dollars or euros as the underlying asset. In addition, commodity-based stablecoins such as gold or silver also fall into this category.
The issuer of blockchain stablecoin assets will work with an independent custodian bank whose job is to maintain the fiat money that is the reference. The custodian bank must then be audited periodically to comply with applicable government regulations.
A type of stablecoin based on another cryptocurrency. Because generally, crypto assets are assets that have high price volatility, usually the number of coins that are used as reserves (reserved) to issue these stablecoins is more than they should be. Its purpose is to accommodate price changes in cryptocurrencies that are used as reserves.
Binance example of 2000 USD to issue a stablecoin equivalent to 1000 USD. Thus, if the exchange rate of Ethereum to the dollar drops by 50%, the price of the stablecoin is not disturbed.
TerraUSD (UST) is an algorithmic stablecoin, which means the cost of minting is equal to the face value of the stablecoin minted. It uses LUNA, Terra’s native cryptocurrency, as a reserve asset. In other words, if you want to mint one TerraUSD, only $1 worth of LUNA Terra tokens will be burned from the system. If there is a massive sale of UST assets to the point where the depeg occurs, Terra’s network will need to continue printing LUNAs until their prices plummet due to hyperinflation.
The value of the $TRON stablecoin has now depreciated to a value of $0.96.
The USDD value had dropped in early November but was able to return to normal. Currently, USDD is experiencing depeg again, which makes its value unstable. Bear on altcoins also affects the value of the USDD. If the stablecoin $TRON is not able to keep its value at 1:1, then it may suffer the same fate as $LUNA.
