In Conversation: mStable discusses the future of stablecoins
Earlier this month, we caught up with mStable, the decentralised stablecoin basket built on Ethereum. mStable aims to solve issues like fragmentation and unattractive yields by providing DeFi users with access to its stablecoin, mUSD. We wanted to learn more about how mStable is changing the landscape of stablecoins in DeFi, so we caught up with the team’s Marketing & Communications Manager, Derek E. Silva. In our conversation, he explained the advantages of using mStable, and how he thinks stablecoins will evolve alongside traditional currencies in the future.
How does mStable limit the risk of stablecoins losing their peg?
mUSD offers a diversified basket of collateral assets, offering the ability to redeem mUSD for any assets in the basket. This offers mUSD holders flexibility, while putting their funds to work through Save when not in use.
Do you have an estimate on the average APY offered via the Save feature over the whole year?
It varies based on a variety of factors, mostly Swap fees generated, but it is fairly consistently around 20%.
How would Monolith users benefit from holding mUSD in their wallets?
Holding mUSD helps protect against a single stablecoin going significantly off-peg because of the make-up of the basket. mUSD does not contain any blacklist mechanisms, and it allows you to earn a high native interest rate when not being used. mStable’s team is also making significant efforts to make mUSD usable all across DeFi and as a payment option.
There are many more stablecoins that have been developed recently. Do you have plans to add any others to mStable at a later stage?
Absolutely. Through the team’s own research, and taking ideas and feedback from the community, we anticipate the number of assets in the basket to continue to grow as long as the collateral has a significant supply, has been battle tested, and benefits the protocol overall.
Do you follow much on the Central Bank Digital Currency developments across the world? How could that change things for crypto stablecoins?
I do pay attention to all the various experiments going on. I think the most important thing to keep an eye on is how those currencies are distributed, the level of privacy available, the amount of security forethought going into it, what kind of blockchain or other distributed ledger technology is used, and so on. Will they use public chains or private chains? I’m just as curious as many others to see how these pan out.
How do you see stablecoins evolving over the next year?
I think we will continue to see all sorts of algorithmic stablecoins developed, we will almost certainly see more attacks, and inevitably some of these experiments will fail. Regardless of what happens, I am optimistic that the best stablecoins will win out and thrive.
Where do you see stablecoins fitting in with respect to traditional currencies in the future?
Truthfully, I think they should sit right along traditional currencies, whether it’s paper, plastic or a CBDC. History has shown us that anything humans value can be used as a medium of exchange, including stablecoins on a blockchain. At the end of the day, does it really matter whether I pay my optometrist with Canadian Dollars, TrueCAD, QCAD or mUSD? As long as the currency or token has value and can continue to be used, it shouldn’t matter how we pay for products or services.
Learn more about mStable here.
Download the Monolith app here.
