Bitcoin Forum

Instead of regular centralize stablecoins, why we don't have a stablecoin with its own blockchain or a token where anyone can mint or redeem that stablecoin using ONLY Cryptocurrencies at the market price.

For example if I have 1 Eth and want to mint it into Xusd (community stablecoin) it goes like this example:

If Eth market price = $1000 I send 1 Eth to this blockchain or contract and I receive 1000 Xusd.
And it can be redeem for any Crypto at market price,
If Eth price = $2000 I send 1000 Xusd and get 0.5 Eth.

That's not how a stable coin works. You may want to read what happened to Luna and their stable coin.

I think you're not getting the point, the creation of a stablecoin that will work the way used said is not the problem but how it will survive in the long run.
Have you ever wondered why we never have a decentralized stablecoin in the entire cryptocurrency market?
Every stablecoin is just a copy of fiat currency, instead, focus on the creation layer1 stablecoin focuses on something that will help the Bitcoin network.

Luna USD was backed with their own coin luna, I am talking about using well known cryptocoins like btc eth ltc..

Bitcoin's value is far from stable.

You’re still saying what LoyceMobile is saying, the other coins you will be pegging the stablecoin with are also not stable and anything that happens to the parent coin on the blockchain that it is built on will definitely affect it too. If you do the pegging with this cryptocurrency coins you aren’t creating anything different from A token which we have in large numbers already

Why do we need an independent blockchain for the stablecoin? In order to keep a network like that up and running + decentralized will require active nodes (preferably full nodes) to remain active on the network. Those node operators need to be incentivize. It's just too much work to bootstrap plus I don't see why the wheels need to be reinvented.

Also, you didn't mention if it would be collaterized or just derive value from within the network itself. If it's the latter, then the design is flawed by default.

It is obvious that you are not well versed in what you write about. Otherwise, you would know that there are not only centralized stablecoins on the cryptocurrency market, but also decentralized ones, such as  DAI, USDD, USDN and others.

You can't back a stablecoin with non-stable assets. Also, there are decentralized stablecoins, do more research.

ETH value is not fixed. its gotta be a big loss for holding stablecoin if this is how its done.

this stablecoin will be devalued easily like the UST of Luna when users are going to claim their ETH or sell their Xusd. some platforms even over-collateralized their stablecoin just so they are going to be safe from devaluation, especially during the bear market. DAI I think is just one of them and also the DJED of Cardano which is 4:1.

During the growth market, we can easily see a series of developers launching their own stablecoins and then unfortunate events happen because of the very problem they see as a guarantee. Even if it is BTC, ETH,... it is not capable of maintaining its value at a safe level, so large companies that can ensure their stablecoins are safe will still receive trust. user's idea.
And the next problem that I see and will definitely be more common is that with the variety of different stablecoins (not just $), we will see more stablecoins from countries. So make sure it's worth it, as long as it's convenient for all parties, it won't be a big deal.

If it was that easy to create a coin like that then it would exist already, for the ones exchanging their coins this seems like a great deal as they can always exchange their coins at the market price, but the ones allowing for this to take place are the ones taking all the risks for no gain to themselves.

Tell me where are you going to find people that are willing to do that consistently? Or where exactly the volume is going to come from?

Very vulnerable to bad things and if you have assets, for example ETH, you can also exchange ETH to BTC directly on the leading exchange in your area and why don't you have to go far in advance by exchanging ETH to Xusd. It's also clear that if it doesn't it can get even more chaotic later.

Stable coin and decentralized cryptos cannot hold together because you don't have anything that's stable in crypto and moreover Bitcoin which we consider as stable compared to other coins is not really stable when it comes to mainstream finance and things don't work especially for stable coin the way you mentioned.

Stablecoin means it should replicate the value of USD or Fiat in general but you cannot have the same consistency in ETH or any other crypto's price. What if you have sent 1 ETH to blockchain to receive 1000 Xusd but at the time of transaction the value of ETH fluctuates? Who will take the loss or profit? We cannot define stablecoin and back it up with any crypto assets.

In this case, both Eth and Xusd are assumed to be worthless because their true value comes from depositing and burning, or the value of Eth is always low due to printing more currencies without burning them. The main problem with stable currencies is that a certain value must be maintained by burning or minting currencies, and this means the presence of a central party that compares the value of the dollar and maintains it due to the lack of representation of the dollar on the blockchain.

warpped tokens close some coins and give you an equal value in the form of tokens, and then these tokens can be burned or minted, but the problem lies in ensuring that the closure is 1:1 and provides liquidity, which is still done centrally or at the level of one blockchain and not several blockchains.

There's no need for that. Tether and other stable coins are already and also called as community stable coins. If you are going to make one, that doesn't make sense anymore. Because every new creation of a stable coin will be said, it's good for the community and it is the ideal stable coin that every members of the community. It's going to be a nonstop creation of it because that's what everyone going to aim for when they see that there's something wrong on the first one.

What you are proposing seems to me very similar to what has already been implemented. These are wrapped tokens that are tied to the cryptocurrency for which they were issued. For bitcoin there is Wrapped BTC (WBTC), for ETH there is Wrapped ETH (WETH). They have pretty much the same price as BTC and ETH and follow their price all the time. And they can be exchanged for any other cryptocurrency. I may be wrong.

I think you got his proposed idea wrong and if I am right he is proposing something like DAI, a stablecoin project pegged to 1:1 US dollar but using Ethereum as collateral to maintain the pegged value which makes it one of the few existing decentralized stable coin project.

But I don't know how is it possible to have a native blockchain for such project will work.

It can be done with a asset that is stable in price. With a volatile asset like ETH or Bitcoin this can be challenging because those stablecoins needs to be backed by collateral assets. So if it is backed by ETH and the price of ETH goes down and its TVL goes down than the total amount of Xusd minted then the protocol will be under collateralized. That means all the Xusd holders will not be able to cash out or redeem their Xusd. It is not that simple, as the OP is thinking.

Bitcoin started the crypto and it was decentralized but it's sad that as the day passes by the idea of crypto being decentralized is diminishing. We are now being invaded by centralized sh8t. So there you have it, if there are centralized coins or centralized stable coins, then there must also be decentralized stable coins, and these are the ones that people should support, not those centralized ones because this is where we can experience a true freedom, just like what we attained when we use Bitcoin.

Despite of that, I'm still not aware that USDD, USDN, and the likes... have existed. I mean are they a new type of decentralized stable coins? Cool, but I will observe their performance first if they are also trusted and worthy to use other than DAI and the rest of the known decentralized stable coins.

You do make a valid point, although wrapped tokens are more like a way to use a particular cryptocurrency on other Blockchains, but they pretty much don't allow you to use smart contracts or other decentralized applications.

Nevertheless, traders continue to use centralized stablecoins, while ignoring decentralized ones, despite many different negative news. And if we compare the capitalization of the most popular decentralized stablecoin DAI with the centralized USDT, we will see that DAI is used 18 times less than USDT.

Besides the already mentioned fact about decentralized stablecoins being a thing your idea has an issue

If you back the stable coin with assets whose prices are floating respect to the thing you stablecoin is pegged to, you are left with two options:

Either you simply hold the backing assets or you trade them against the currency your coin is pegged to and among themselves in order to minimize the effects of volatility

In both cases you will end with either profits or loses, and it will make your coin less an stablecoin and more a security. I actually think about DAI as a very well managed security with no immediately apparent way for the investors to take profits or loss, still like it more than other 1:1 cryptos, btw

I’m not sure I totally understand your suggestion/opinion, but I’m just wondering if the centralization of the current stablecoins is worth all of this? What you’re saying can actually be achieved with the current stablecoins we have (swapping from one crypto to another, e.g Eth to USDT). And in your suggestion you said “1 Eth”, have you forgotten that 1 Eth of yesterday isn’t the same as today’s, neither is today’s the same as tomorrow’s? Before such a token is created, a lot of thinking happens, without which you’ll build a shit coin. You should have basically just said; a stablecoin that is entirely decentralized.