Reducing the Volatility of Cryptocurrencies -- A Survey of Stablecoins

Ayten Kahya, Bhaskar Krishnamachari and Seokgu Yun

Papers from arXiv.org

Abstract: In the wake of financial crises, stablecoins are gaining adoption among digital currencies. We discuss how stablecoins help reduce the volatility of cryptocurrencies by surveying different types of stablecoins and their stability mechanisms. We classify different approaches to stablecoins in three main categories i) fiat or asset backed, ii) crypto-collateralized and iii) algorithmic stablecoins, giving examples of concrete projects in each class. We assess the relative tradeoffs between the different approaches. We also discuss challenges associated with the future of stablecoins and their adoption, their adoption and point out future research directions.

Date: 2021-03
New Economics Papers: this item is included in nep-pay and nep-rmg
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