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I thought stablecoins were a scam?

• pedalpete 3y ago
  Stablecoins provide all the risks of crypto, with none of the rewards. They aren't inherently a scam, but that doesn't mean that they can't be part of a scam. Luna had a "stablecoin" but that turned out to be a scam, but that doesn't mean all stablecoins are scams.
  • inhumantsar 3y ago
    Terra's stablecoin wasn't so much a scam as it was built on a house of cards. They backed it with their own coin and a dynamic mint/burn algorithm, basing it all on the assumption that they'd never have that kind of crisis. In the end tho they did and it became a feedback loop. Circle's treasury is (iirc) 1:1 with USD and T-Bills. If those fail the way Luna did then there are bigger things to worry about.
• Ekaros 3y ago
  At best they are like PayPal... So pretty bad.
• jdminhbg 3y ago
  There are two different kinds of stablecoins. One is algorithmic stablecoins, which you probably remember from the Terra/Luna collapse. It relies on issuing/redeeming one cryptocurrency for another to keep the peg, which works mathematically unless the divisor goes to zero, which is what happened. USDC is just a one-to-one stablecoin where for every coin issued there is one redeemable US dollar somewhere. People have accused Tether, which works on the same principle, of being a scam by not actually having a dollar for every USDT, but there's nothing inherently scammy or non-scammy about the system. It's like a bank, either they have the reserves they claim or they're committing fraud.