Stablecoins

It is a very interesting topic. It is a very interesting topic.

Basically there are two types: Basically there are two types:

• hard-pegged IOU-based ones (like Tether or Gemini Dollar) =here you deposit $1in the bank and get 1 stablecoin;

• sok-pegged algorithmic ones (essentially loans against a cryptocurrency with interesting incentive structures https://medium.com/@james_3093/the-dai-stablecoin-is-a-game-changer-for-ethereum-and-the-entire-cryptocurrency-ecosystem-131b412d1e75 )

The algorithmic ones will probably be wiped out if there is a flash crash or other black swan event. But so far the peg has been relatively close to 1.

The most popular IOU-based one (Tether) is widely assumed to be created for evading banking blockade for KYC/AML non-compliant exchanges. On the other hand, Gemini is doing everything by the book (they were the first NYDFS-compliant Zcash exchange, for example) so not competing for random customers. There are USD, Tether, and Gemini Dollar trading pairs and the peg is very close to 1 in practice.