What are Algorithmic Stablecoins?
What are Algorithmic Stablecoins? How do they work and what ecosystem exists around this industry?
The topic considered for the first chapter of the research collaboration with Economics Design and Lemniscap for Algorithmic Stable Coins.
Without going into the details of their operation and the reason for their existence, a topic widely discussed in the research downloadable here, these coins and related projects are attracting a lot of attention. The scope of this post is to share the highlights and main findings of the research carried out over 8 projects that differ from each other in mechanisms and stabilization algorithms.
What are Algorithmic stablecoins?
Algorithmic stablecoins are tokens pegged to a fiat currency which is usually the US dollar. They respond to market events using predetermined stabilization measures hardcoded into smart contracts on Ethereum. This greatly increases their decentralization and has the opportunity to create a smart, fast, responsive global currency not governed by a single institution that can act as a medium of exchange not just for DeFi but the whole world.
