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A rapidly rising market cap that depends on the expectation of continued growth of demand. Some stablecoins are more protected than others against drops in dema
by shkkmo 5y ago
A rapidly rising market cap that depends on the expectation of continued growth of demand. Some stablecoins are more protected than others against drops in demand.
However, without a compete backing the the currency a stablecoin, there is a point at which sufficient supply of the stablecoin cannot destroyed and the peg will break as supply outstrips demand.
When the bubble pops there will be a lot of broken pegs but it most likey won't wipe out every stablecoin.
- xur17 5y agoBut that's not how the decentralized ones work. They aren't relying on "a rapidly rising market cap". Most of the stablecoins are backed by volatile assets (ETH, BTC, etc), but have automated systems to liquidate the collateral when price drops occur. The only real problem would be a very large drop in a very short period of time, and the big stablecoins already have already survived 50% drops in pretty short time spans.