🤔 [Analysis] A Taxonomy of Stablecoins - Cyrus Younessi

Stablecoins come in multiple forms, but they have one similarity: binary risk. If a stablecoin is not worth $1, then its worth nothing according to Cyrus Younessi. The disparity of information between users and issuers slows the collapse of a stablecoin. The ideal coin is both censorship resistant, mimicking Bitcoin ($BTC) or Ethereum ($ETH), and has verifiable reserves with stability mechanisms. These two goals work against each other, meaning users and issuers have to stomach a little less of one in favor of the other. Confidence is key to containing binary risk and is often boosted by collateral, convertibility, or audits at the cost of censorship resistance. MakerDAO ($MKR) has worked through the paradox by setting up a decentralized autonomous organization (DAO) to both protect user privacy while ensuring value through cryptocurrency collateral.

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