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SBF
@SBF_FTX
1) A good point someone brough up recently: really 'stablecoin' is used to mean multiple different things.
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SBF
@SBF_FTX
Just as the outside view skeptics predicted, during a large market move a stablecoin blew out. Just not the stablecoin they predicted. Which was predictable, if you knew the details. This isn't a comment about good vs bad--it's about how important it is to know the details!
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SBF
@SBF_FTX
2) One thing it can mean is "stablecoin backed 1:1 by USD in a US bank account". That's what current drafts of US regulations are looking to license, as a first step.
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SBF
@SBF_FTX
3) Another is "stablecoin backed >= 1:1 by liquid debt assets, treasuries, and USD". Non-zero price risk, but generally they stay very close to $1 because they can be redeemed. E.g. USDT has stayed within a few % of $1 during this crash, and hearing $1b+ successfully redeemed
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SBF
@SBF_FTX
Replying to
@SBF_FTX
5) Really we shouldn't use the same word for all of these things. What we call 'algorithmic stablecoins' aren't really stable in the same way that fiat backed stablecoins are. They're more like structured products, and they need upside if they want to justify the risk.
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SBF
@SBF_FTX
6) This might not seem as important to people in crypto, because we already know that algo stablecoins are pretty different from fiat backed ones. But in the policy space, that message often gets lost. We need to be explicit about it.
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Larry Cermak 🫡
@lawmaster
Replying to
@SBF_FTX
The fourth option that isn't as adopted or explored much but really good idea IMO is a stablecoin designed from tokenizing funding rate arbitrage positions
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