Apr 08 2023 11 mins
Episode Highlights
Stable coins were created to provide stability to crypto assets by being pegged to a stable asset like the US dollar.
Stable coins are integral to the crypto space, and transactions involving them accounted for $1 trillion in 2022.
The failure of SVB caused the value of USDC, the second largest stable coin, to drop to $0.82 on certain protocols, as $ 3 billion of Circle's cash reserves were held by SVB, and only $250,000 was insured. This led to panic among USDC holders, which led to USDC’s drop in value.
Stable coins are subject to the vagaries of human nature and counterparty risks, and their success is dependent on the confidence people have in them.
There is a need for more robust stable coins, because their usage and adoption is based on their perceived stability.
Additional reading
- https://www.coindesk.com/learn/why-stablecoin-usdcs-unstable-weekend-matters/
- https://cointelegraph.com/news/usdc-depegged-but-it-s-not-going-to-default
Fiat-backed stable coins
- https://www.coindesk.com/learn/fiat-backed-stablecoins-what-you-need-to-know-about-tether-usd-coin-and-others/
- https://www.coindesk.com/learn/whats-the-point-of-stablecoins-understanding-why-they-exist/
Stable coin usage and adoption
- https://thedefiant.io/stablecoin-volume-hits-record-high-of-7-4t-in-2022
- https://www.bloomberg.com/news/articles/2022-05-29/moneygram-ceo-sees-a-future-in-stablecoin-remittances
Crypto-specific news websites
- Coinmarketcap: https://coinmarketcap.com
- Coindesk: https://www.coindesk.com
- Cointelegraph: https://cointelegraph.com
- The Block: https://www.theblock.co
- Decrypt: https://decrypt.co