Analyze the pros and cons of 6 major collateralized stablecoin projects and their stabilization strategies
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What is a Collateralized Stablecoin?
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Ecosystem and key players
This area was one of the last to be developed. While stablecoins have been part of the crypto ecosystem for a long time, in the last period, smart currencies that never broke away from their pegs and tried to be as decentralized and stable as possible are being developed.
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Metrics and key areas to analyze
In previous studies, a framework for defining metrics was adopted and some excellent results were obtained. The study of protocol indicators, which are sometimes difficult to analyze, can be the foundational part, as it defines the general aspects involved in all projects.
The framework is further divided into three macro reference areas:
market design,
mechanism design,
Token design.
These metrics are considered the most important as they affect the robustness of such collateralized stablecoin designs. It is also important to note that the study was limited to on-chain data from January 1, 2021 to May 24, 2021, to ensure that the time periods used are consistent and to remove any market shocks from different time periods.
Market Design: is the ecosystem in which participants trade and tokens exist. Restricting the digital environment is important because market design defines structural limits to the effectiveness of mechanisms.
Mechanism Design: The mechanism design in the protocol defines the ground rules governing user interaction with the protocol. Generally, these metrics refer to how well the protocol manages the volatility of the underlying asset in order to maintain a constant exchange rate over a period of time.
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in-depth
Once the various aspects of the protocol have been studied and their behavior analyzed in a single indicator, the study dives into the Discussion section. The point is to understand which parts of the different designs have the most impact on the final scenario of a stablecoin algorithm in production. As in the previous part, the discussion here is divided into several parts, trying to define some basic points from which insights can be found.
The purpose of this research is to understand which parts of different protocol designs have the greatest impact on the final scenario we see in the reserve-based stablecoin market. Specifically, the goal of stablecoins is to optimize stability. To do this, we split the discussion into 6 categories: Network Effects, Demand, Governance, Stability, Incentives, and Secondary Tokens.
Network Effects: A decentralized network disseminates transactional information through multiple channels, rather than relying on a single point of contact. The number of links between each transaction determines the degree of centrality score.
Demand: The demand for a stablecoin is determined by the number of transfers in circulation. In general, a higher percentage means a higher availability of the stablecoin. Ideally, we want a stablecoin with high and fast-growing monthly transaction volume, with transaction volume growing faster than supply growth.
Governance: Governance can be divided into hard governance and soft governance. Hard governance includes rules, mechanisms, and ecosystem policies fully embedded in the code. Soft governance means that the governing body can change the parameters of the ecosystem, such as changing the interest rate, inflation rate or redemption rate.
Stability: Since stability is the main aspect of these currencies, it is difficult to define it, so its definition and its identity are divided into several points, such as the frequency distribution of prices, speed, efficiency and stability mechanisms.
Incentives: We have identified two main approaches to analyzing incentives around staking stablecoins. One of the focuses, of course, is a recurring theme and pivot of this study: stability. While the second contains "pure" incentives that don't contribute to or contribute to the stability of the protocol, but instead rely solely on economic benefits.
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MakerDao
in conclusion
in conclusion
Collateralized stablecoins are one of the most interesting parts of DeFi, and their influence in the entire ecosystem is growing day by day. The basis of a perfect protocol is to enable tokens and currencies to respond optimally to external events through stability and robustness. Many of the fundamental problems identified in the research should serve as clues for improving the status quo.
As mentioned earlier, we're talking about protocols that are still young, but potentially disruptive. This research should be considered a personal insight to better understand the current state of the work, but should in no way be considered final or complete. DeFi, tokens, and stablecoins are a fast-growing space that has the potential to upend previously taken-for-granted ideas and dynamics every month.
This article comes from the decentralized financial community and is reproduced with authorization.
Source：https://medium.com/coinmonks/what-are-collateralized-stablecoin-3411a24def7c
This article comes from the decentralized financial community and is reproduced with authorization.
