Mapping The Stablecoin Ecosystem
With over $130Bn in circulating supply, stablecoins are among the most important on-chain assets. This week's market map separates stablecoins into two categories: Central Issuance and Algorithmic. Central Issuance refers to regulated entities issuing tokens backed 1:1 by fiat or fiat-equivalents. Algorithmic stablecoins, on the other hand, rely on a series of smart contracts to maintain their peg, and require little-to-no human intervention.
Ampleforth is a stablecoin protocol that adjusts the AMPL token supply based on demand. Unlike conventional stablecoins, AMPL's flexible supply mechanism modulates token supply daily according to market dynamics.
Circle is a digital payments platform that specializes in facilitating peer-to-peer transactions on-chain. Its stablecoin, USDC, is pegged to the US dollar and aims to offer a secure, transparent, and regulated medium for exchange.
Coinbase is the premier centralized exchange platform in the US. Through its partnership with Circle (called Centre), Coinbase has been an important catalyst for the growth of USDC supply since 2018.
Curve Finance is a decentralized exchange optimized for stablecoin swaps and liquidity provisioning. It has also introduced its own over-collateralized stablecoin, crvUSD, backed by an array of other stablecoins such as USDC, DAI, and USDT.
MakerDAO is a decentralized autonomous organization that built and now manages the DAI stablecoin. DAI has an algorithmic peg to the US dollar. Using Ethereum-based smart contracts, MakerDAO ensures DAI's stability through asset collateralization and automatic adjustments.
PayPal, a global online payments giant, empowers users with electronic money transfers. While historically a traditional payments provider, PayPal has recently launched PYUSD (in partnership with Paxos Trust), a 1:1-backed stablecoin available to users of both the PayPal app and Venmo.
Tether is one of the original, centrally-issued stablecoins; it’s pegged to the US dollar via fiat and fiat-equivalent reserves. Within the crypto ecosystem, Tether is both the largest stablecoin by issuance and a consistent target of transparency-related scrutiny.
UXD Protocol functions as a decentralized algorithmic stablecoin. The protocol employs delta-neutral derivatives to sustain its US dollar peg. This implies that UXD isn't anchored by any centralized entity or tangible assets, but is sustained by a sophisticated network of financial contracts.
About Slow Burn
Weekly explorations into emerging crypto trends and how to navigate 2023 from the Slow Crypto Team, Sam Lessin, Clay Robbins, and Caroline Cline.