In order for the Stablecoins algorithm to survive in the long run They must find broad acceptance for payments in the real economy. According to Goldman Sachs analysts,
“Stablecoins are currently limited to use as a medium of payment. And if real-world use cases grow over time, It can create a more stable base of demand for these assets,” the investment bank wrote in a research note on Monday. “Hopefully, stablecoin algorithms can survive in the long run. If there is an ongoing transaction-related demand.”
The bank points out that stablecoins meet demand in the crypto market by allowing investors to trade them for less volatile assets without converting to fiat currencies. This is not new for those who are familiar with the foreign exchange market. which some currencies, such as the Hong Kong dollar is pegged to other currencies
“It is not surprising that the Stablecoin algorithm has many vulnerabilities in the exchange rate. This includes the risk of being attacked by speculation.”
Stablecoins algorithm is also available.riskof “self-fulfilling crises” when investors fear the currency will weaken. and sell it Their speculation could put pressure on that currency.
However, the bank believes the stablecoin algorithm can survive. When there is enough demand and related use cases
“The positive network impact of more non-speculative use cases for these protocols. This could result in a more stable demand base over time,” the bank concluded.
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