Stablecoin - Framework _ Design _ Future.pdf

1. Stablecoin
F R A M E W O R K | D E S I G N | F U T U R E

2. 1
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T A B L E O F C O N T E N T S
Why Stablecoin?
Types
Framework & Design
Future

3. Stablecoins promise to bridge
fiat currencies with the world
of cryptocurrencies.

4. Why Does Price Stability
Matter?

5. Use Cases for a Price-Stable Cryptocurrency
D E V E L O P I N G M A R K E T S
A L O W - V O L A T I L I T Y
C R Y P T O A S S E T F O R T R A D E R S
C R E D I T A N D D E B T M A R K E T S
R E M I T T A N C E

6. How do we analyze stablecoins?
Governance Reserve Primary Market​ Reserve Management​
Potential to Fail
​
Why would it happen? & How a 'run on the bank' would be handled?
• Centralised
• Decentralised
• Fully Backed
• Over Collateralised
• Under Collateralized
• Non-Collateralized
• % Composition
• Token-mint event
• Token-burn event
•
•
What?
How?

7. S
T
U
D
Y
C
A
S
E

8. USDT USDC
1. Run by Circle Internet Financial Limited, USA
2. Fully backed by USD & its derivatives
1. Run by Circle Tether Operations Limited, USA
1. Tokens are minted when USD is added to reserve and burnt otherwise
2. It is essential to notice that we as users lack the transparency of the actual assets held in terms of credit risk, duration
2.
3. 24% cash and 76% derivatives - stands to the
restriction of U.S regulators, but does hold the
risks of a centralized entity.
3. When general markets are in a deep downtrend
that lasts a while, the USDT treasury is bound to
undergo a stress test!

9. DAI cUSD
1. Governed by community voting on an OS smart-
contract stability protocol Mento, built on Celo
1. Coordinated by makerDAO - community governance
2. 167% over-collateralised by ETH, Bitcoin, etc.
1.67USD for every 1$ in DAI
2. 279% collateralised - 50% (CELO) / 50% BTC,
ETH, DAI
4. Significant drop in price of ETH, BTC might see
one 'run to the bank'
3. New DAI is minted when people ask for a loan and
burnt when people repay the loan on MakerDAO
protocol.
3. 1cUSD minted for 1 CELO & 1 CELO burnt for
1cUSD, reserved by 'dynamic hedging'
4. Significant drop in price of CELO (volatile) might
see one 'run to the bank'. However, dynamic
hedging automaticallyprovides enough stable
value in case of extreme downturn.
5. Also backed by regenerative assets like MCO2

10. UST
1. Governed by Terra
2. No on-chain collateral, LFG holds 3B$/19B$ (15%)
to maintain the peg (off-chain), independently
audited.
4. Increased selling pressure on UST causes buy
pressure on LUNA, that resulted in unlimited
LUNA tokens, hence the tragic de-peg
3. Mint 1UST with 1$ LUNA. Burning 1UST, mints 1$
LUNA(non-reserve asset) —> Smoking Gun that
caused the de-peg

11. MTR (metastable coin PoW)
1.
2.
Used for everyday payments, transaction fees, storage fees for validators & store of value on Meter Network L1
Completely decentralised & each MTR is created with 10 kWh of electricity using SHA256 Proof of Work. (non-
collateralised)
How is it different compared to existing stablecoins?
1.
2.
The cryptocurrencies used as collateral may only be a small percentage of circulating supply in order to avoid
avalanche crashes during liquidation scenarios.
They must also rely on oracles which are typically centralized since there are limited sources of high-quality data.
Miners’ profit chasing behavior ties the cost of global competitive electricity price to the value of MTR, creates more
purchasing power. When the price of MTR goes up profit-driven miners will allocate more of their mining equipment to
mine MTR (balancing the price).

12. Framework | Design
D U A L / T R I P L E
C O I N
A L G O R I T H M I C
S T A B L E C O I N
S T A B L E C O I N
2 . 0

14. D U A L C O I N T R I P L E C O I N
D U A L C O I N

15. Common characteristics of algorithmic stablecoin
Λ + Γ +
Fully on-chain
(minus oracles)
01 02 03
Algorithmic
peg-mechanism
Zero or volatile collateral
without liquidations

16. NEW ERA
STABLECOIN 2.0
UXD

17. FUTURE DIRECTIONS
S T A B L E P A Y
A R E G I O N A L S T A B L E F O R E A C H
R E G I O N A L E C O N O M Y
S T A B A L I Z I N G T O A C P I
P E G T O O T H E R A S S E T S / T V L

18. Thank you