2 ms·
A stablecoin that was fully backed with dollar reserves would be fail-proof. The problem is such a stablecoin would also be unprofitable, because the issuer wou
by lottin 4y ago
A stablecoin that was fully backed with dollar reserves would be fail-proof. The problem is such a stablecoin would also be unprofitable, because the issuer would have expenses but no revenue. The way they generate revenue is by investing part or all of their reserves in assets that generate a return. However, as soon as they do that, the stablecoin is no longer fail-proof because these investments are not risk-free.
- User23 4y agoThe risk-free rate of return is generally greater than 0%, so with a large enough issuance I imagine it could be done safely. But "don't get greedy" is a commonly ignored principle.