How Safe Are Stablecoins? Let's Talk Risk and Trust

[TastyChillySauce00]

It really comes down to how you use them yourself. Stablecoins are great as ''tools'' for transfers, trading or short-term parking. I wouldn't hold or store them long term.

Stablecoins are not even meant for holding; they're just supposed to provide value support for trading. If there ever be a need to hold any stablecoin, it should be DIA, which at least can't be frozen like Tether, and its government agency is doing with any wallet they suspect.

That should be the case, reality isn't as simple as that. Billions in stablecoin are staked in defi with 3-5% APY. That means big number of people planning to hold it long term since such low interest only works for long term.

If you're only using it for trading temporarily, even the shittiest stablecoin will do. For long term it's entirely different story, limiting only to stablecoin with proper regulation, or even better the one which issuer listed in NYSE and got routine audit is the way. DAI isn't really safe either since majority of its reserve is just USDC.

[nelson4lov]

Imo, stablecoins are safe as long as you don't do anything shady that would trigger a block. The benefits of these stablecoins when they actually work far outweighs the demerits. There are semi decentralized stablecoins too and I feel like with the way the government is pushing stablecoins and the stablecoins industry, we might actually get a fully decentralized stablecoin soon.

[passwordnow]

Imo, stablecoins are safe as long as you don't do anything shady that would trigger a block. The benefits of these stablecoins when they actually work far outweighs the demerits. There are semi decentralized stablecoins too and I feel like with the way the government is pushing stablecoins and the stablecoins industry

The governments have tried to push for CBDCs but I think that the trend and narrative for that is becoming out of the line. They're becoming forgotten already and they want to focus with stable coins instead. No need to make new infrastructures and push for that because they're already known.

we might actually get a fully decentralized stablecoin soon.

As they say DAI is fully decentralized stablecoin but, the network of it or the developers that have made it is not excepted for potential value drops based on what their assets might lead. But to be honest, I think that most people who converts into stablecoins doesn't really care whether they hold a centralized or decentralized stable coin. As long as they're holding a stablecoin with a good volume, there is nothing to worry with.

[jostorres]

Stablecoins are not even meant for holding; they're just supposed to provide value support for trading. If there ever be a need to hold any stablecoin, it should be DIA, which at least can't be frozen like Tether, and its government agency is doing with any wallet they suspect.

That should be the case, reality isn't as simple as that. Billions in stablecoin are staked in defi with 3-5% APY. That means big number of people planning to hold it long term since such low interest only works for long term.

If you're only using it for trading temporarily, even the shittiest stablecoin will do. For long term it's entirely different story, limiting only to stablecoin with proper regulation, or even better the one which issuer listed in NYSE and got routine audit is the way. DAI isn't really safe either since majority of its reserve is just USDC.

There will be some period in history where governments will make their own stablecoins, that is what all of this CBDC or whatever it's called exists and they are working on it. It's still a few years away and not easy to make right now, but that will be when we are going to see safe stablecoins.

Because there is no more "we lost your money" possibility, they can just print more if they want to and pay you, which means while it's devalued, and inflation hurts your value, you at least can feel safe about it. Until then, there is no reason why we should trust some companies, I agree with that and stablecoins are only good for moving money around and not for keeping, if you are keeping stablecoins you are making a mistake.

[Perfectbaby]

Stable coin are all Centralized coin except for DAI, which Decentralized, although I am not really relying on any stable coin except for Bitcoin that is why most of my investments and holdings are being channelled to Bitcoin.
When talking about trust or less risk we can fully talks about DAI as it's decentralized coin.

[el kaka22]

Just because you want to trust a place, doesn't mean that you can trust them, there is a big difference for sure. It is not that much of an easier thing and for that reason I would say that you are not going to find a trusted stablecoin. Stablecoins will always carry a risk and if you want to take that risk then it is on you and there is nothing you can do about it but at the end of the day we are not going to see them become safe, it will always be risk and that is the problem for sure.

In reality, life span of stablecoins is up to government policies. Seizing may happen at any time if governments feel that stablecoins are threat to their fiats or stablecoins are easy hub for laundering and for funding illegal things. So, stablecoins can never be safe like decentralized things.

[wiss19]

In reality, life span of stablecoins is up to government policies. Seizing may happen at any time if governments feel that stablecoins are threat to their fiats or stablecoins are easy hub for laundering and for funding illegal things. So, stablecoins can never be safe like decentralized things.

Yeah, here we are debating on centralized entity and not just on decentralized coin or token. When there are corporates behind those coins and token then there would be obvious risks with them still as long as you trust a company with your money, you can trust it, but that logic has never made sense for me.

Like not too long ago USDT was penalized and had to pay a fine, while it was a small amount and did not matter to them, it was still a proof that these companies can be sued, and if one day trump wakes up and says he will create his own stablecoin and all other stablecoins are banned, imagine the chaos that will happen. This is why it is not really smart to go with stablecoins.

[free-bit.co.in]

Stable coin are all Centralized coin except for DAI, which Decentralized, although I am not really relying on any stable coin except for Bitcoin that is why most of my investments and holdings are being channelled to Bitcoin.
When talking about trust or less risk we can fully talks about DAI as it's decentralized coin.

DAI is the only decentralized stablecoin. This means that holding it will help us avoid being tracked, prevent our accounts from being frozen suddenly, and allow us to have complete control over our money.

However, just because it is decentralized does not mean its absolutely secure. It could still lose its peg if the market experiences significant volatility, especially in a bear market.

Additionally, it should be noted that its market capitalization and liquidity are significantly lower than those of USDT and USDC.

[jostorres]

DAI is the only decentralized stablecoin. This means that holding it will help us avoid being tracked, prevent our accounts from being frozen suddenly, and allow us to have complete control over our money.

However, just because it is decentralized does not mean its absolutely secure. It could still lose its peg if the market experiences significant volatility, especially in a bear market.

Additionally, it should be noted that its market capitalization and liquidity are significantly lower than those of USDT and USDC.

Just because it's decentralized doesn't mean that it's good, it's still a terrible one and because of that it really doesn't feel safe at all. Decentralized is worse at this point because it can either be hacked into (which happened in defi world before) or it could be manipulated and bots could attack to depeg it one day as well.

People never learned anything from the LUNA attacks and why that crashed the market so much, the reality is that it may look like a good decentralized project but it could get depegged and it happened before so there is no guarantee that it won't happen again. Don't get me wrong centralized stablecoins are even worse but it doesn't make DAI good, it just makes it another bad one along with other stablecoins.

[Balmain]

Now a new Stable coin is coming Fidelity's stable coin. Most stablecoins are centralized. It might sound off-topic, but even altcoins marketed as decentralized are actually centralized. Therefore, I think we need to spread the risk evenly and manage our finances accordingly. It's better to have some money in all of them than to rely on a single stablecoin, for worst-case scenarios.