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How can stable coin ever maintain the price? People can still speculate and sell it for more than a $, and buyers can buy it for more than a $.
by sgondala2 8y ago
How can stable coin ever maintain the price? People can still speculate and sell it for more than a $, and buyers can buy it for more than a $.
- loeg 8y agoTraders, including HFT, are incentivized by the underlying value to keep the bid/ask spread very tight.
- sgondala2 8y agoIsn't this the same for any coin? Is making a stable coin as simple as naming it a 'stable' coin ?
- loeg 8y agoYou could ask the same question about any security. Yes, traders in general are incentivized to bid/ask near the actual value of the underlying security. The difference between securities in the abstract and a trustworthy, 100% reserve stablecoin is that the value of the latter is both known ($1) and stable (at least in USD terms). Yeah, stablecoins really are as simple as naming it a stable coin and pledging 100% real currency backing, so long as you can convince traders you are trustworthy. E.g., I have some confidence Coinbase is trustworthy; I have zero confidence Bitfinex is trustworthy.