Help me to undestad the stable coins.

[seoincorporation]

I can't understand the logic behind the stable coins and I hope you can help me.

Let's take as an example Tether.

The current Circulating Supply is 82.44B and each one costs 0.00002298BTC or $1.

If bitcoin drops from $45k to $22.5k then the Tether value goes to 0.0000459BTC or $1.

So, how do they technically do it? does the Circulating Supply just divide by 2? and if they have a dynamic Circulating Supply I would like to know how they deal with that topic on the exchanges.

Source: https://coinmarketcap.com/currencies/tether/

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[Yogee]

I'm not that knowledgeable on the technical side but yes it has something to do with the circulating supply. They mint fresh tokens and distribute to the market or they burn them in their treasury depending on the prive of BTC. They are most likely in contact with exchanges to pull this off.

[dansus021]

it just my opinion that fiat backed stablecoin like tether, USDC, BUSD they not move the Circulating supply but only using trader who believe that tether is always 1$ if you notice when bitcoin drop and bitcon bull there is always plus minus on tether price is not always 1$ sometime it down couple cent or vice versa

but if algorithm stablecoin as far i know is using burning and minting mechanism and buyback program but Correct me if iam wrong

[Findingnemo]

Tether is not backed by Bitcoin neither any of the other cryptocurrencies, its backed by the fiat value so their circulating supply won't be changed no matter the price of Bitcoin is not increasing or decreasing but technically they are not mining so when there is demand they simply mint new Tokens and circulate them into the market.

[seoincorporation]

but if algorithm stablecoin as far i know is using burning and minting mechanism and buyback program but Correct me if iam wrong

So, that's how it works, now I get it thanks for the information guys. If they can add or remove coins on their blockchain now the tech side has sense.

But how about the market capitalization, in their transparency page we see they have like $46B

https://tether.to/es/transparency

But coinmarketcap says $85B...The numbers in their market don't match at all.

[cryptoperkele]

I can't understand the logic behind the stable coins and I hope you can help me.

Let's take as an example Tether.

The current Circulating Supply is 82.44B and each one costs 0.00002298BTC or $1.

If bitcoin drops from $45k to $22.5k then the Tether value goes to 0.0000459BTC or $1.

So, how do they technically do it? does the Circulating Supply just divide by 2? and if they have a dynamic Circulating Supply I would like to know how they deal with that topic on the exchanges.

Source: https://coinmarketcap.com/currencies/tether/

I don't get what you are saying. It has nothing to do with circulating supply. In fact the whole concept of marketcap valuation doesn't really apply with stable coins as they are backed by dollar and so worth their marketcap value is more artificial then stocks or cryptocurrencies. You could ask same thing about usd and their circulating supply.

[ryzaadit]

A simple way.

In fiat "Stable-asset" value is always based on the value asset backup of the asset. Example for USDT the value is always see from "FIAT" aspect 1:1$ based on the real asset has been backup for USDT.

Other currency pair trading estimation is just following the price of a stable coin. The supply is still same, is only estimation pair trading must be following 1$.

[dansus021]

So, that's how it works, now I get it thanks for the information guys. If they can add or remove coins on their blockchain now the tech side has sense.

But how about the market capitalization, in their transparency page we see they have like $46B

https://tether.to/es/transparency

But coinmarketcap says $85B...The numbers in their market don't match at all.

yea and also a lot of theories about tether  consipacy about their dont have all that amount of USD but who knows hehe

[bluebit25]

I also find it confusing when we argue about the price of $1= ...BTC I don't think it will convert at that rate. Normally we look at 1 BTC= xx$ , I see all stablecoins require one or some mechanism to correct the price when it deviates from the peg. By looking at the plausibility and feasibility of these mechanisms, we can see if the idea of ​​the project is viable. Some of the most notable stablecoin price adjustment mechanisms on the market are:
Redeem & Expand.
Algorithmic.
Leveraged Loans.

[nakamura12]

This is how I understand about the stable coins. We know that usdt is backed by us dollar so the ratio is 1:1 and when Bitcoin price increase like $40000 per 1 bitcoin then 1 usdt to btc will be based on the btc price. Just think of USDT to BTC as a conversion between btc to us dollar. So in short, no matter what price is btc when you trade your usdt to btc it will always be the same as btc to usd except after you trade as we know there are fees when you trade. Let's say that burning, minting or adding new coin will help keep the price of usdt same as usd. Correct me if i'm wrong how I explained about the stable coins.