Algorithmic Stablecoins: These stablecoins use algorithms to back their value, there are some variants that can be pegged to fiat values, depending on the algorithm used.Precious Metal-Backed Stablecoins (or Off-Chain Collateralized Stablecoins): Like gold-standard fiat, these stablecoins use gold and other metals to back their value. ![]() Crypto-Backed Stablecoins (or On-Chain Collateralized Stablecoins): These are backed by other crypto assets.Fiat-Backed Stablecoins (or Tokenized Fiat): These stablecoins are backed by and pegged to dollars (or other fiat currency), and their value remains tied to the price of the pegged currency.Stablecoins and Synthetic Assets TodayĬurrently, there are 5 different types of stablecoins/pegged assets: SORA synthetics implements this concept and in a way, you could say that Irving Fisher is the father of SORA Synthetics. With the advent of cryptoeconomic systems on blockchains, the “compensated” dollar principles, Fisher’s groundwork, could finally be translated into the realm of cryptoeconomics and given new life as part of a cryptoeconomic system: “a blockchain-based token can be created as a derivative of another one, targeted at holding a stable unit of value”. However, at the time, Fisher’s ideas were not adopted due to operational and harmonization issues of the economy of that period. In other words, because gold was highly volatile in purchasing power, instead of keeping the dollar fixed to a certain amount of gold, Fisher proposed that the dollar be backed by varying amounts of gold, but pegged to a basket of goods (an index). ” This would come to be the groundwork for the “compensated” dollar. Under the plan proposed, we should have a dollar of fixed purchasing power, but varying weight. “We now have a dollar of fixed weight (25.8 grains), but varying purchasing power. ![]() ![]() Long before cryptocurrencies (or even digital computers) existed, back in 1912, the American economist Irving Fisher questioned the instability in the purchasing power of the gold-backed US dollar, explaining: XOR SynThetics, hereafter, XST, are synthetic assets pegged to an index of value and backed by the XST platform token, but, what is a synthetic asset or stablecoin to begin with? ![]() XSTUSD - A Stablecoin on SORA for the Polkadot Ecosystem What is XST? Fisher’s Compensated Dollar
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