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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
4) A third is "stablecoin backed >= 1:1 by a very volatile asset". Those are 'algorithmic' stablecoins. If the underlying crashes they can go down. A lot. e.g. UST.
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Larry Cermak 🫡
@lawmaster
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@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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Evan Kuo 😇
@evankuo
Replying to
@SBF_FTX
and
@lawmaster
Like this thread. What would you call stablecoins backed by ‘coupons’ or binary options predicated on future growth? That’s what I’ve been calling algorithmic stablecoins. Been calling the > 1:1 collateralized ones crypto-collateralized
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