Crypto

The race for decentralized stablecoins continues – L’AGEFI

As Mikhail Egorov, founder and CEO of Curve, announced on July 21, one of the biggest players in decentralized finance (DeFi) is preparing to launch its stablecoin, a cryptocurrency circulating on a blockchain and backed by fiat currency (euro or dollar) or another currency. cryptoactive This announcement comes two weeks after Aave, another DeFi heavyweight, proposed to his community that they launch GHO.

The operation of the stablecoin offered by Curve is similar to that of Dai, launched and released in 2017 by MakerDAO, a decentralized autonomous organization created by Dane Rune Christensen in 2014, which is by far the 4th most popular stablecoin on the market after USDT from Tether, USDC from Circle and BUSD from Binance.

During its launch and to this day, for the first time, Dai allowed users to receive stablecoins without first selling their crypto assets. Compared to buying Tether, you first needed to convert your Ether or Bitcoin to USD in order to receive USDT tokens. It also offers unprecedented transparency as all of its smart contracts, these custom computer programs, can be verified by anyone, unlike centralized stablecoin reserves. MakerDAO smart contracts work without administrator rights, which allows you to make the liquidation rules immutable, without the possibility of recourse. It was also interesting to note that the first positions refunded by Celsius were loans taken from MakerDAO or Aave.

Its arbitrage-based dollar pegging system has always proven to be resilient, including against the waves caused by the fall of Terra-Luna. “The fact that Dai is also perfectly resilient to the latest crisis may have convinced some DeFi players to get going,” notes Manuel Valente, CTO at Coinhouse. Indeed, the operation of maintaining the dollar anchor GHO offered by Aava to his community is almost identical to that of Dai. Even if little information is filtered out at the moment, Curve should follow the same path.

Sustainability

The fall of the Terra-Luna stablecoin reminded us that even a player deemed too big to fail can burn out in 48 hours. Multiplying decentralized stablecoins for the biggest DeFi players would make the ecosystem more resilient in the event of a peg or circle fall, for example, these two stablecoins are widely used to provide loans or leverage transactions. All MakerDAO smart contracts that allow you to borrow Dai are 51.4% backed by USDC.

The fall or hardship of many centralized players leaves protocols like Curve or Aave open to continue gaining market share. Getting their own stablecoin will allow them to attract more liquidity when they exit the bear market. Now it remains to find out the features offered by each of them to stand out from the competition, but there is no doubt that decentralized stablecoins will grow in the coming months.

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