Stablecoins have seen massive trade volume and market cap growth this month especially after the market carnage on March 12, 2020.
Stablecoins are digital currencies developed to minimize the volatility of the price of set stable coin. Stablecoins can be pegged to fiat currency, like the US Dollar, another cryptocurrency, like USDT, or to exchange traded commodities, like precious metals. As such, stablecoins are not intended as an investment vehicle, but rather a safeguard towards the underlying value of the pegged asset (b.g. US Dollar, gold, USDT).
Cryptocurrency’s promise is to make money and payments universally accessible– to anyone, no matter where they are in the world.
The President of The European Central Bank (ECB), Christine Lagarde, has issued a clear statement regarding the organization’s feelings toward cryptocurrencies and stablecoins in particular. The European Central Bank governs and manages the financial and economic interests of the nineteen European Union (EU) countries that have adopted the ‘Euro’ currency. In a recent press conference …
Libra could face even more stringent requirements as U.S. lawmakers introduce a bill seeking to classify stablecoins as securities.
We demonstrate fundamental results about dynamics and liquidity in stablecoin markets, demonstrate that these markets face deleveraging spirals that cause illiquidity during crises, and show that these stablecoins have ‘stable’ and ‘unstable’ domains.
Starting from documented market behaviors, we explain actual stablecoin movements; further our results are robust to a wide range of potential behaviors. In simulations, we show that these systems are susceptible to high tail volatility and failure. More