Close Cookie Preference Manager
Cookie Settings
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage and assist in our marketing efforts. More info
Strictly Necessary (Always Active)
Cookies required to enable basic website functionality.
Made by Flinch 77
Oops! Something went wrong while submitting the form.

The Ultimate Stablecoin Handbook: Is stability possible for crypto?

Medb Kiely-Cuddy




February 7, 2023

The Ultimate Stablecoin Handbook: Is stability possible for crypto?

A stablecoin may seem like an oxymoron to many—a cryptocurrency that isn’t volatile or susceptible to market fluctuations. And to outsiders, the crash of Terra/Luna, the subsequent crash of DEI and Neutrino, and the temporary depegging of Tether and Tron make the term stablecoin seem like someone named them after one shot too many.  

However, within the crypto ecosystem, stablecoins are one of the most useful tokens available, and there have been several notable projects creating stablecoins, like USDC (USD Coin) or BinanceUSD, that have withstood the current bear market. Stablecoins can bridge the worlds of TradFi (traditional finance) and DeFi (decentralized finance) and offer a straightforward way to dip your toes into crypto without drowning.  

While there have been many failed projects and unsuccessful pegs within the brief history of stablecoins, they’re one of the most practical forms of cryptocurrency for worldwide adoption. Of course, it’s vital to be able to separate the wheat from the chaff and choose a truly “stable” stablecoin.  

To do this, we need to understand what a stablecoin is, what has caused previous projects to fail, and what makes a robust stablecoin.  

What is a stablecoin?  

Many people think of stablecoins as dollars in crypto form. Although this is a helpful analogy, it doesn’t cover the entire scope of what a stablecoin is. Simply put, a stablecoin is a cryptocurrency whose price is tied to another asset. This asset can be fiat currency, commodities, or another cryptocurrency. Pegging the value to another asset theoretically reduces the volatility of the token's price—making it “stable.”  

A historical parallel of this is the Gold Standard. Previously, currencies in the US and other countries worldwide were backed by commodities such as gold or silver. If you had a dollar, you could exchange it for the equivalent in gold at a central bank. Although this was abandoned globally by 1971 due to liquidity issues, two World Wars, and the Great Depression, many banks still hold large gold reserves today.  

Gold was considered a stable anchor to manage inflation and the variances between the currencies of countries worldwide. From 1880 to 1914, while the gold standard was in place, the average annual inflation rate was about 0.1%. This low inflation rate has been the main reason for proponents of the gold standard to pop up during periods of high inflation. However, most economists believe this isn’t a practical option due to a wide range of economic factors.  

Stablecoins work in a similar fashion. With stablecoins, you should, in theory, be able to exchange it for whatever it is pegged to for the same price—therefore, a stable price. They surpass gold by being more useful, easily transferred and stored, programmable, and many more reasons that we’ll cover shortly. There are four main types of stablecoins defined by what the value is pegged to and how the value is maintained.  


Like the gold standard, you can have commodity-backed stablecoins. If you want to channel your inner “gold bug,” Tether Gold (XAUT) and Paxos Gold (PAXG) are two gold-backed stablecoins. XAUT holders can redeem their tokens for gold held in custody in Switzerland. The Swiss Real Coin (SRC) is a token backed by real estate. Tiberius Coin (TCX) was backed by seven precious metals before it halted the sale of tokens. These tokens are centralized and should have a central reserve for redeeming tokens.


The most accessible and easy-to-understand form of cryptocurrency. This is a cryptocurrency backed by a fiat currency such as the US dollar or the euro. Tether (USDT) and USD Coin (USDC) are pegged to the US dollar. So, for every USDT or USDC token you hold, you should be able to redeem it for $1 from their centralized reserves. With familiar prices and a simple mechanism, these centralized stablecoins have become the bridge that connects the traditional finance world to the crypto space. Many crypto traders hold their assets in these cryptocurrencies to weather market volatility.  


These stablecoins are collateralized by another cryptocurrency. Now, this may seem to contradict itself. Reduce the price volatility of crypto by pegging the value to crypto? Stablecoins like DAI offer a decentralized alternative to fiat-backed stablecoins (often managed by a central reserve). These tokens hold another cryptocurrency in collateral to fix the price of the stablecoin. The stablecoin is generally minted as an overcollateralized loan to be paid back. Interest on the loan can be varied to control this “soft” peg.


A more recent entry to the stablecoin market, algorithmic stablecoins use smart contracts, seigniorage, and code to maintain the token's price at a certain level. These coins can be collateralized or uncollateralized and rely on a robust arbitrage mechanism. Examples include Neutrino, DEI, and Terra. Most of these tokens have crashed in the wake of the Terra/Luna crash (don’t worry, we’ll get to that!). These coins are often partially or fully decentralized.

What makes a stablecoin “stable”?

In these times, more than ever, people are wondering, are these stablecoins secure? Bear markets cause both retail and professional investors to batten down the hatches and secure their assets. Stablecoins could potentially be a safe port to weather the storm in.

In traditional finance, we see a spike in the gold market during economic uncertainty as a safe way to hold value. Some people rush to take their money out of the bank, preferring to keep it themselves. In crypto, we see the same thing. Users flock to cash out their crypto or exchange their altcoins for less volatile currencies.  

A genuinely robust stablecoin should be a perfect choice for any crypto holder in these conditions. So, what are we looking for in a stablecoin? What causes these tokens to destabilize and lose their peg? To recognize a truly stable token, we need to look at a few main factors.


In a bear market, antifragility is what matters. Will the token crumble under pressure and depeg? We’ve seen this with Terra/Luna, DEI, and many other coins. A panic followed by a mass withdrawal causes the token's price to spiral and depeg. For a cryptocurrency to be stable, it needs to be able to handle market crashes, mass withdrawals, and human behavior. These issues have been the downfall of many stable cryptocurrencies, including Terra.

It can be challenging to spot this in a bull market. When everyone is doing well, critical analysis of these protocols can be dismissed as FUD—Fear, Uncertainty, and Doubt.  

Rather than getting swept up as everyone goes to the moon, always take a good look at the project and how they plan to deal with the tough times as well as the good. Many insightful crypto analysts have ended up being right when initially met with skepticism.  

Trusted or Trustless

DeFi and much of the crypto sphere work based on a “trustless” foundation. Much of traditional finance is the opposite. We use trusted intermediaries to guarantee that our transactions will go smoothly. Banks hold our money and transfer it to other bank accounts. An exchange handles currency conversion. Mortgage providers carry out credit scores, so the real estate agent knows they're not getting conned.  

Trust is a vital part of everyday finance. If I send you money, the bank authenticates me. Then you know the money you’re getting is real, not a briefcase full of $3 bills.  

In decentralized finance, we rely on smart contracts and blockchain consensus networks to remove the intermediary and create a “trustless” economy. A decentralized network verifies transactions before they’re added to the blockchain, and smart contracts are designed to automate complex transactions removing the risk of fraud and reducing red tape.  

With crypto-backed or algorithmic decentralized stablecoins, the protocol and prices are usually managed by smart contracts. A decentralized stablecoin needs to be trustless and reliable. The code needs to work, and it needs to work well.  


Remember, one of the most intrinsic qualities of a stablecoin is its peg. What is the value tied to, and can we redeem it for the equivalent in its backing. If I have $1 in USDC, can I exchange it for US$1? Many fiat-backed stablecoins claim that you can redeem them. However, once you look closer, the fine print makes the situation a little more complicated. Many have a minimum withdrawal and high fees to prevent users from quickly cashing out.  

So, when choosing a fiat-, commodity-, or crypto-backed stablecoin, you need to pull out your reading glasses and look carefully at how you can redeem or cash out. Many crypto traders have only found out when it’s too late, and their money is locked into a protocol with no recourse for withdrawal.  

Audited reserves

Diehard crypto fanatics may recoil at the idea of having a trusted central reserve that is audited regularly. However, for any fiat-backed (and maybe even crypto-backed!) stable currency to work, we need trust.  

At the end of the day, we need to know that our money is safe and that we can cash out whenever we need to. Not only does this protect the customer, but this also protects the network from bank runs. When you have validated faith in a company, users are less likely to panic and start cashing out in a bear market.  

In response to the bank runs of the Great Depression, the US government established the Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits held in banks and financial organizations to prevent bank runs in the case of market instability.  

While many crypto exchanges offer FDIC insurance, it’s important to note that this only applies to US dollar deposits, not crypto holdings. In time, we may see an equivalent for crypto holdings that could assuage the fears of many crypto traders.

Recently, the US has introduced legislation requiring stablecoins to be backed by reserves. While this is only a recent development, this may lead to a higher standard of stablecoins for the average American.

The project’s team and core goal

While anonymity, or at least pseudonymity, is a core principle of cryptocurrency, it’s essential to understand the team behind any project. Do they have experience in the field or a history of solid financial dealings? Are they profit-driven, vanguards of an economic revolution, or hopeful daydreamers? While hopefully, doxxing isn’t necessary to have trust in a team, we need a way to know that the team cares about the project and has the skills to carry it to fruition.

After the crash of Terra/Luna, details surrounding the team emerged that called the project’s integrity into question. The creator of Terra, Do Kwon, and other members of Terraform Labs were previously involved with Basis Cash, another failed algorithmic stablecoin. Do Kwon has since moved on to his 3rd coin, Luna 3.0. This time he has moved away from stablecoins, although with little success.

Why are stablecoins important?

So why use a stablecoin when you can just use a dollar? Or why not use ether or bitcoin?

Market stability

While Bitcoin may be a household name (depending on who you live with!), it can be volatile, unpredictable, and vulnerable to manipulation. In bear markets, many investors withdraw their money from unstable crypto into more traditional assets. With stablecoins, traders can still hold crypto without being exposed to the downward trend.  

Day trading

Stablecoins offer a way for investors to easily capitalize on market changes. Many crypto traders use stablecoins rather than cashing out into fiat money when they want to store their assets safely. This way, there are no conversion or high bank fees when buying other cryptocurrencies. Users can easily reinvest and take advantage of market changes without transferring their money in and out of banks.

Crypto services

For banks that want to hold assets in cryptocurrency for customers or investments, stablecoins are a safe option. It provides both banks and individuals with an entry point into the crypto ecosystem. Having your assets held in crypto makes it easy to quickly capitalize on market changes without waiting for a bank transfer.

Global payments and remittances

One of cryptocurrency’s most touted use cases is immediate cross-border payments. While this is hugely useful as our lives become more intertwined across the globe, sending your money across the world only for the value to drop before you can cash out isn’t ideal.  

With stablecoins, you can quickly transfer value without a market crash affecting the value of your assets. You can also transfer money across borders without banks skimming off the top for conversion and transfer fees.

Programmable money

Having a dollar that can do much more than a piece of paper opens a broader range of financial options. Smart contracts and blockchain technology have enabled the concept of programmable money.  

With smart contracts, you can set up a loan that automatically returns to the lender once certain conditions are met. Or set up a payment to occur when an item is delivered. Or energy bills that are continually paid as usage occurs. Or money that recipients can only spend for a chosen purpose. As a new concept, many uses for smart money haven’t even been dreamt of yet. And this can all be done using a token as familiar as the US dollar.

Worldwide adoption

For crypto maximalists, this is a strong use case. Having the value of a crypto token be understandable and familiar makes it easier to introduce crypto to the masses. The value of .0445 BTC can be indecipherable to many, but 1,000 USDC is $1,000 dollars. This helps newcomers get to grips with crypto. Merchants and retailers may find it easier to accept these tokens that don’t change in value from when the sale is made to when it settles in their accounts.

Wrapped Tokens

Although we don’t often use the term stablecoin when discussing wrapped tokens, these tokens are also, by definition, stablecoins. They are crypto-backed stablecoins where a cryptocurrency is pegged at a 1:1 ratio to another. They’re commonly used for bridging tokens from one chain to another.  

The most popular wrapped token is WBTC or Wrapped Bitcoin. WBTC is a token on the Ethereum blockchain that is pegged to the price of Bitcoin. Bitcoin holders can lock their BTC tokens with a smart contract and receive 1 WBTC for every BTC token locked. Then users can spend and use their Bitcoin in dApps and smart contracts on the Ethereum network. When finished, they can exchange their remaining WBTC tokens for BTC tokens at a 1:1 ratio.  

RenBTC (RENBTC), Bitcoin BEP20 (BTCB), and Wrapped Ethereum (wETH) are just some examples of wrapped tokens. These tokens allow users to access a broader range of DeFi services without the risk of losing value by exchanging your tokens for a more volatile cryptocurrency.  

Which stablecoin is safe?

So, you want a stablecoin that you can rely on? It can be hard to choose with so many on the market today. As we’ve discussed, there’s a wide range of factors, and each stablecoin has unique features and history. Here’s an overview of some of the most popular or infamous stablecoins since their inception. While the idea of a stable digital currency has existed since long before cryptocurrency took its first step, the stablecoin story begins in 2014.

BitUSD and NuBits

In the beginning, there was nothing. Then Satoshi Nakamoto said, let there be Bitcoin. Since then, we’ve seen thousands of cryptocurrencies spring up. The first stablecoins, BitUSD and NuBits, were created in 2014, 6 years after Nakamoto released the infamous Bitcoin whitepaper.  

While neither token gained the same traction as their successors like Tether or USDC, these projects ignited a spark in the minds of many looking to bridge the gap between TradFi and DeFi. Both were backed by other cryptocurrencies and pegged to the US dollar.  

While tokens of each are still in circulation today, the projects are considered relics of the early days. The same year saw the launch of Tether, a successful stablecoin backed up initially by fiat currency.

USDC (USD Coin) and EUROC (Euro Coin)  

USD Coin is one of the most popular and reliable fiat-backed stablecoins and is pegged to the US dollar. USDC was founded by Centre, a consortium including members of Coinbase and Circle (a blockchain fintech company). USDC is fully backed by US dollars or similar US-regulated assets such as US Treasury securities. Their reserves are independently overseen and attested monthly by Grant Thornton. They also submit yearly audits carried out by a public accounting firm.

USDC is one of the most transparent stablecoins and reserves are kept with regulated US institutions such as BNY Mellon and Blackrock. They are proactive in meeting any potential regulation. As such they are a popular choice for financial institutions looking to offer crypto products.

Centre has recently launched the EUROC token as a stablecoin pegged to the euro. Although demand for euro-pegged stablecoins is low, they could gain traction as the ECB moves away from negative interest rates. As US regulation surrounding stablecoins tightens, traders may move from the popular US dollar-pegged stablecoins to euro-based alternatives.

USDC has remained one of the most reliable stablecoins in the market alongside BinanceUSD, created by prominent crypto exchange, Binance. BinanceUSD is regularly audited and follows similar practices. BUSD and USDC have seen considerable growth in market share as users move their assets from Tether.  

However, if you prioritize decentralization, you’ll need to look further afield as they are the most centralized stablecoins on the market today. Circle also reserves the right to freeze USDC held in any wallet. This happened recently during the Tornado Cash sanction and in response to a request from law enforcement.  

Terra/Luna Crash  

Well, we all know how this story goes. Boy makes token. Token is promised to be stable based on pure mathematics. Boy and token make millions. Retail investors lose it all. A tale as old as time, right?  

But how exactly did this crash come about, and could we have foreseen it? We can find the answer somewhere between basic human emotion, the actions of whales and venture capitalists (VCs), and whether “code is law” can ever be relied on.  

Although Terra began to lose its peg on May 7th last year, we need to go back to the start. In 2018, Do Kwon and Daniel Shin launched the Terra network as a payments network with plans to create a stable cryptocurrency to make accepting crypto payments easier. Although they received feedback warning them of a potential death spiral, they were undeterred and launched the Terra and Luna coins as an algorithmic stablecoin pairing.  

Terra and Luna worked as a pair. Terra (UST) was valued at $1, and the algorithmic relationship between the two tokens supported the peg. Users could always trade 1 USD of Luna for 1 UST through the Terra portal.  

So, if UST was in high demand with a low supply, the price would become slightly higher than $1 on exchanges, say $1.001. A holder of 1 USD worth of LUNA could trade it for 1 UST through Terra and then sell it for $1.001. They would make a profit of $0.001, and the supply of UST would increase, reducing the demand. The opposite can be done if demand is low and supply high. Done large-scale, this form of arbitrage had maintained Terra’s peg for several years. However, in periods of extreme market volatility, this algorithmic system can fail when investors panic or start dumping.  

Over the coming years, Terra became more popular, and the price of Luna rose in response. The Anchor protocol was launched, a lending protocol that promised lenders 19% APY (Annual Percentage Yield). Although there were not enough borrowers to justify this high interest rate, the returns kept coming, and users kept locking their tokens into the protocol.

At one point, 72% of Terra was locked into the Anchor protocol. Many retail investors were unable to withdraw their tokens when Terra crashed. This caused enormous losses for individuals as whales and VCs withdrew money from Terra, causing the value of their locked tokens to plummet.  

The Luna Foundation Guard was set up in January 2022 to build reserves to support the UST peg during volatile market conditions. Throughout early 2022, the Luna Foundation Guard (LFG) bought vast amounts of Bitcoin, and the price of Luna soared as money poured in from large investors buying UST.

Then May hit, and the house of cards started to crumble. Crypto whales started cashing out, trading UST for USDC, and dumping UST on Anchor and Curve. LFG started selling and loaning out Bitcoin to market makers to defend their peg, draining their wallets and affecting the price of Bitcoin in the process. The market started to panic.  

As some would expect, seeing Terra lose its peg and whales cashing out caused a bank run that Terra either hadn’t planned for or couldn’t manage well enough. On May 12th, the price of Luna dropped 96%, and the Terra blockchain was temporarily halted twice. The stablecoin entered what was termed a “death spiral.”

The stablecoin never recovered from the crash. Bad planning, natural human behavior, and the actions of whales and venture capital firms all contributed to the downfall of Terra at a considerable loss to individuals, many of whom invested their life savings.  


Another victim of the so-called “death spiral”, DEI is an algorithmic stablecoin launched by Deus Finance. DEI worked similarly to Terra. The collateral ratio of DEI is maintained by arbitrage bots that trade DEI and the crypto backing it (DEUS) back and forth as needed to keep the value of DEI at $1. Following the Terra market crash, DEI swiftly lost its peg, dropping to $0.54 in 24 hours. Although Deus started a repegging plan, the token now hovers at around $0.25.


Justin Sun and the TRON Network launched a stablecoin, USDD (Decentralized USD), in April 2022 as a decentralized alternative to USDC and USDT. USDD is an algorithmic stablecoin on the Binance Smart Chain, Ethereum, and TRON blockchains.  

USDD has strong support behind it; Justin Sun has an impressive resume as the founder of Tron network, CEO of BitTorrent, and was listed in Forbes 30 under 30 in 2017. TRON is a long-established decentralized network overseen by the TronDAO, a decentralized autonomous organization. TronDAO is to independently manage the USDD coin and the reserves after a brief period of managing in conjunction with major blockchain institutions.

While initially launched as a purely algorithmic stablecoin, USDD changed its model in response to the crash of Terra. They have adopted an overcollateralized model, maintaining a minimum collateral ratio of 130%. This is to ensure public confidence and reduce the risk of bank runs. TronDAO has pumped money into the reserves to help strengthen the stablecoin; however, it is still slightly below the peg of $1. TRON claims this is because it is an algorithmic soft peg rather than a centralized hard peg.


A popular crypto-backed stablecoin on the Ethereum network, DAI is most well-known for its decentralization. DAI is governed by its Decentralized Autonomous Organization (DAO), MakerDAO. This organization is composed of any holder of the governance token, MKR.

MakerDAO has made headlines for being a truly decentralized protocol. There is no central party, and holders of the MKR token can vote to change any parameter of the Maker protocol. Crypto proponents hold up MakerDAO as one of the best examples of truly decentralized governance.

MakerDAO uses a series of smart contracts and a lending system to maintain the price of DAI at $1. Users can deposit Ethereum-based crypto and receive DAI in return with a need to supply at least 150% collateral. Many investors use MakerDAO primarily as a lending protocol.  

While the price of DAI has experienced fluctuations over time, it has been one of the most successful decentralized stablecoins. Even during the Terra/Luna “death spiral,” the price of DAI stayed between $0.995 and $1.005.

Diem (Libra)  

Meta’s (formerly Facebook) venture into crypto, Libra, was launched in June 2019 and rebranded in 2020 as Diem. Diem approached collateralization slightly differently. Tokens were backed by a “basket” of investment assets and fiat currencies from several countries rather than a single currency. This is designed to reduce reliance on the monetary policy of one specific country for its value. Users could redeem their tokens in the fiat currency of their country.

However, this project ran into quite a few hurdles as they tried to jump through the regulatory hoops of each country. Meta and Diem also received heavy criticism from both governmental bodies and the public about privacy concerns, their project's impact on economic markets, and antitrust issues.  

Meta halted the project, and in January 2022, announced they were winding it down and selling all assets and technology to Silvergate Bank.  


Finally, we come to Tether. Tether, or USDT, is the world’s largest stablecoin and the entry point for millions of traders into the crypto space. With the 3rd largest market cap of any cryptocurrency, Tether has an average daily trading volume of $57.46 billion. Countless traders use Tether as a bridge between fiat and crypto. Day traders are particularly fond of this token. With a long history of (mostly) keeping its peg, confidence in the protocol is high.  

However, before you think we’ve found the holy grail of stablecoins, Tether has had its fair share of controversy and skeptics. This is partly to do with their connections to Bitfinex, a crypto exchange popular with large-scale traders and liquidity providers.  

You might know Bitfinex from such stories as NYC General Attorney sues Bitfinex, Bitfinex fined for illegal activity, Bitfinex manipulating the price of Bitcoin, and Tether and Bitfinex lending scandals. Bitfinex and Tether have the same parent company, iFinex, causing some critics to question the project’s integrity.

Tether’s reserves have also been the topic of much discussion. When initially launched in 2014, Tether claimed their tokens were backed up 1:1, so every 1 USDT was backed up by $1 held in their reserves.  

However, unlike USDC, Tether has failed to show any proof or carry out any independent audits or attestations. Over time this claim has been adjusted to their current claim: “backed 100% by Tether’s reserves.” These reserves included commercial paper, money market funds, loans, and even other cryptocurrencies. This has led some to question whether Tether could redeem tokens if there was a bank run.

In 2022, Tether announced they would no longer be using commercial papers in their reserves. However, their website currently shows commercial paper as part of their reserves.

Despite this, Tether remains hugely popular. Tether denies any wrongdoings and claims to be completely financially stable. Perhaps at this stage, some consider it too big to fail, and if it does, a considerable portion of the crypto market may collapse with it. The Terra/Luna crash could look like peanuts in comparison. Whether or not a decentralization-driven economy should have a lynchpin like Tether is a topic for another day. Until then, Tether is still the stable crypto of choice for many.

Is a decentralized stablecoin possible?  

The stablecoin world is still evolving and has much further to go before we see a genuinely stable token. Much like the larger nascent crypto industry, these are the early days of trial and error. Many bright minds are working hard to create a stablecoin that can withstand the tumultuous rollercoaster of crypto.  

Currently, the sturdiest stablecoins are centralized and fully backed by reserves. Meanwhile, many crypto proponents are looking for the next decentralized stablecoin that preserves the core ethos of cryptocurrency.  

Naturally, you may wonder, can a decentralized stablecoin ever retain its peg long-term? Is there an algorithm robust enough or a smart contract infallible enough to account for market fluctuations and human behavior?  

The failures of earlier projects don’t seem to deter many of its strongest proponents. The coming years will see increased innovation in the stablecoin space as developers try to find the perfect balance between centralization and decentralization.

Recent legislation will make algorithmic stablecoins all but impossible in the US. Under this legislation, stablecoins must be backed by “not less than 100 percent of the face amount of the liabilities of the institution on payment stablecoins issued by the institution.” This means that stablecoins must be fully collateralized by assets held by the project in their reserves. So, for every $1 of stablecoin issued, the project must hold $1 in assets.  

As a result, a US dollar-based, algorithmic, decentralized stablecoin has little chance of succeeding. However, centralized, fully-backed stablecoins may have an opportunity to grow within a legal framework.  

Stablecoins and traditional finance

Stablecoins offer a real bridge between traditional finance and the crypto world. Having a token that is as understandable as fiat money but as flexible as crypto opens the world of cryptocurrency to many more people. A stablecoin that can maintain its peg consistently has a lot to offer both TradFi and DeFi providers.  

Although many stablecoins have failed, there is no lack of appetite for stablecoins in today’s climate. In times of uncertainty, stability is in high demand. Tokens like USDC are hitting their stride and showing the world what a stablecoin can truly do. As centralized stablecoins like USDC increase their market share, innovative trailblazers in the crypto sphere are working hard on creating a reliable decentralized stablecoin.

Central banks are also getting in on the stablecoin game. Many governments are issuing Central Bank Digital Currencies (CBDCs). These are government-issued digital coins often tied to the native currency. Some CBDCs may use blockchain technology, however they are not technically cryptocurrencies. Examples include eNaira (Nigeria), eCNY (China), Bolívar Digital (Venezuela), and Jam-Dex (Jamaica).  

In the coming years, we will see what stablecoins can become and what they can offer. They could bring a sense of stability and sensibility to a young and volatile market.