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Stablecoins have become integral to the cryptocurrency ecosystem allowing traders, lenders and decentralized applications to avoid volatility while staying natively on-chain. Since Tether pioneered the category seeing massive growth, many alternative stablecoin models have launched aiming to improve reliability and mainstream adoption.
This detailed guide analyzes the most popular stablecoin architectures comparing attributes around decentralization, use cases and risks to gauge sustainability. Core models explored include:
- Fiat-collateralized like USDC
- Crypto-collateralized algorithmic like DAI
- Elastic supply algorithmic like AMPL
- Fractional reserve managed like USDT
- Emerging algorithmic hybrid designs
Analyzing stablecoin properties and recent innovations helps assess merits and risks for usage across payments, lending markets, prediction platforms and tokenized commodities while informing both developers and regulators.
Before surveying prominent alternatives, let’s review core properties that define stablecoins:
Price Stability — Price stays pegged to $1 dollar mark minimizing volatility vs high fluctuation seen in assets like BTC and ETH.
Stability Auditability — Holdings backing coins issued and logic managing pegs disclosed transparently on-chain for community verification giving confidence in solvency.
Redeemability — Users can burn coins to claim backing collateral like fiat, crypto or other assets giving tangible value and redeemability.
Embedded Utility — Stablecoins provide native utility for blockchain use cases like trading, savings and smart contracts needing stable programmable money while avoiding legacy world fiat gateways.
These attributes balance price consistency with transparency on economic security models all while remaining censorship resistant as blockchain based digital bearer assets unlike traditional bank account funds…
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