Stablecoins have become a fundamental part of the cryptocurrency ecosystem over the past few years. Due to its ability to circumvent periods of volatility and its widespread integration with Decentralized Finance (DeFi), These are essential for the health of the ecosystem as a whole.
Tether (USDT) and USD Coin (USDC) are currently the dominant stablecoin coins in the market, but the centralized nature and ongoing threat of stablecoin regulation has stimulated the large crypto community. Want to avoid and try to find alternatives that are More decentralized
Binance USD (BUSD) is the third stablecoin and is regulated by cryptocurrency exchange Binance, while DAI, the top decentralized stablecoin, has 38% of the supply backed by USDC. This raises another question about “Decentralized”.
Investor’s shift towards decentralized stablecoins This can be noted by the increasing market capitalization and number of DeFi platforms integrated with TerraUSD (UST), FRAX (FRAX) and Magic Internet Money (MIM).
TerraUSD
TerraUSD (UST) is a stablecoin that is part of the Terra (LUNA ) ecosystem and is designed to retain its value against the US dollar.
To create a new UST, the user must interact with the Anchor Protocol and burn the network’s original LUNA token, or lock an equal amount of Ether ( ETH ) as collateral.
As a result of recent UST growth, the Terra network overtakes Binance Smart Chain in terms of total locked-in (TVL) value on its protocol, which is now $17.43 billion, according to DefiLlama.
Terra is also accredited by the Curve stablecoin ecosystem, which distributes it over a number of DeFi protocols. This also provides UST holders with other ways to earn along with a 19.5% annual return ( APY) offered to users who stake their UST in the Anchor protocol.
FRAX
FRAX (FRAX) is a fractional-algorithmic stablecoin developed by the Frax Protocol, it is partially backed by margin and the rest is stabilized by algorithms.
Behind FRAX’s growth began with its acceptance by the DeFi community on a number of well-known projects and decentralized autonomous organizations (DAOs) voted to increase support for stablecoins within their ecosystems and treasuries.
FRAX is implemented by the OlympusDAO rebase protocol as a guarantee that can be bonded to obtain the platform’s native OHM tokens. It has also become a stablecoin option in the recently released TempleDAO protocol.
On December 22, 2021, FRAX was added to Convex Finance (CVX) and immediately brought into the ongoing Curve Wars. A number of major DeFi protocols are accumulating CVX and Curve (CRV) to gain voting power over the Curve network and increase stablecoin returns.
This week, Curve Wars has new entrants after Tokemak members voted to add FRAX and Frax Share (FXS) to the Token Reactor.pledgewill “take the battle to a whole new level of greatness”
Magic Internet Money
Magic Internet Money (MIM) is a stablecoin issued by the popular DeFi protocol known as the “Magic Internet Money”. Abracadabra.Money What sets this coin apart is that it is “summoned” when users deposit 16 supported cryptocurrencies in MIM-supported “cauldrons”.
There are limits on the amount of money that can be borrowed from the assets supported on Abracadabra, and this is part of the protocol’s efforts to avoid the kind of problem that MakerDAO (DAI) is facing: the presence of too many centralized stablecoins. and a history of bad liquidations during market volatility
Some of the popular tokens available as collateral for generating MIMs are Ether (wETH), Ether, Shiba Inu (SHIB), FTX Token (FTT), and Fantom (FTM).
MIM has also been integrated into Curve Finance’s consortium, highlighting the important role Curve plays in stablecoin within the DeFi ecosystem, and underscores its motivation for participating in Curve Wars.
Cross-platform exchange and integration with MIM’s centralized exchanges includes a wide range of margin options. It has increased circulating supply to $1.933 billion. This makes it the sixth stablecoin in terms of market capitalization.
While the amount of value held in these decentralized stablecoins is only a fraction of the value in USDT and USDC, they are likely to take more market share in the coming months. This is because those who want decentralization will choose them over centralized coins.