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You are missing the forest for the trees. The point is that the ability to maintain the peg is the only important value of a stablecoin, if this is brought int
by jpgvm 4y ago
You are missing the forest for the trees.
The point is that the ability to maintain the peg is the only important value of a stablecoin, if this is brought into question it will be tested. Once it is tested it will either hold, thus 1 or fail and reside permanently at 0. The exact implementation of the peg management - human, algorithm or otherwise doesn't change this fact.
- simple-thoughts 4y agoEvery stablecoin has a set of use cases, and in some a strict peg isn’t even one of them - instead it’s low volatility. Yes you’re correct that in the case of USDD maintaining a 1:1 peg matters but the use case of USDD is so that Justin and friends mint USDD for themselves then stake for farming tokens and dump those (such as crv and epx). Basically a way to exploit the tokenomics of stableswap amm, so in this case a 1:1 peg is needed. In other cases the primary use case can be to provide liquidity for a product or service. In these cases, a strict 1:1 peg isn’t needed as the product essentially goes on sale if the stablecoin’s value falls. Of course the merchant needs to be locked in to the stablecoin as the sale mechanism for this to work.