Stablecoins are DeFi’s main unit of account, source of liquidity, and largest bridge between crypto markets and real-world balance sheets. Understanding them requires more than sorting tokens by market cap: the useful question is what keeps the peg, what backs the liability, who can intervene, and where the liquidity comes from.
Reading Path
- Is stability a necessity for cryptocurrencies mainstream adoption? starts from the basic need for stable crypto assets.
- The state and future of algorithmic stablecoins covers supply-adjusting experiments and their fragility.
- The tale of two seigniorage models compares Basis-style and ESD-style designs.
- Exploring stable assets on Ethereum expands the topic to pegged assets beyond dollar stablecoins.
- Aave’s GHO stablecoin looks at stablecoin issuance from a lending protocol.
- The Marauder’s Map of Decentralized Stablecoins maps AMOs, PSMs, redemptions, pegKeepers, and other live mechanisms.
- Why Polaris? explains the counterparty-free stablecoin thesis.
Core Concepts
- Stablecoin explains the basic primitive.
- Depeg is the failure mode every design must manage.
- Collateral and overcollateralization define the backing side.
- Seigniorage covers one family of algorithmic designs.
- Money markets explain why stablecoin demand is so tied to borrowing.
