Not tied to the value of other assets
Posted: Sat Feb 01, 2025 9:14 am
Stablecoins of this type allow for secret investment in assets that were previously only available to wealthy people.
Digix Gold (DGX) is an ERC-20 token that runs on Ethereum. It is backed by gold: 1 DGX represents 1 gram of the metal. Its gold reserve is stored in Singapore and is audited every 3 months. DGX holders can even exchange the currency for real bullion - all they need to do is come to Singapore.
Tiberius Coin (TCX) is not tied to a single asset, but to a combination of 7 precious metals used in the production of high-tech equipment. It is expected that TCX will increase in value as solar panels and electric cars become more common.
SwissRealCoin (SRC) is backed by a portfolio of real estate located in Switzerland. Holders of the stablecoin can choose the objects for investment by voting.
Tied to cryptocurrency
Such stablecoins are backed by other digital currencies, which helps them be more decentralized because all transactions take place through the blockchain.
To reduce the risk of price fluctuations, they are often overcollateralized: that is, the value of the collateral exceeds the amount of the loan. For example, to get $500 worth of stablecoins, you need to deposit $1,000 in Ethereum (ETH). This way, they will be collateralized by 200%: even if the price drops by 25%, $500 worth of stablecoins will be collateralized by $750 in Ethereum. If the underlying cryptocurrency falls in price, the stablecoins will be automatically sold.
Transactions in such stablecoins are more secure and transparent. They are often tied to several cryptocurrencies at once to spread the risks. At the same time, this is one of the most complex, and therefore the least popular, groups of cryptocurrencies. The most famous of them is Dai, whose nominal value is supported at the dollar level, but is actually backed by Ethereum.
Such stablecoins are not backed by anything. In fact, the US dollar works in the same way: a few decades ago it was tied to a gold reserve, but it is stable even now because people believe in its value.
The stability of the cryptocurrency’s rate is ensured by seigniorage, the income generated by the issuance of currency and appropriated by the issuer. When demand increases, new stablecoins are issued to normalize the price. When demand falls, coins are bought to reduce the volume of currency in circulation. Theoretically, the price remains stable, as it is controlled by market demand and supply.
This is the most decentralized and independent form of stablecoin. An example of such a currency is Ampleforth (AMPL), which was launched in late 2018. Its algorithms control the volume of coins daily according to demand, to avoid the volatility inherent in collateralized cryptocurrencies.
Digix Gold (DGX) is an ERC-20 token that runs on Ethereum. It is backed by gold: 1 DGX represents 1 gram of the metal. Its gold reserve is stored in Singapore and is audited every 3 months. DGX holders can even exchange the currency for real bullion - all they need to do is come to Singapore.
Tiberius Coin (TCX) is not tied to a single asset, but to a combination of 7 precious metals used in the production of high-tech equipment. It is expected that TCX will increase in value as solar panels and electric cars become more common.
SwissRealCoin (SRC) is backed by a portfolio of real estate located in Switzerland. Holders of the stablecoin can choose the objects for investment by voting.
Tied to cryptocurrency
Such stablecoins are backed by other digital currencies, which helps them be more decentralized because all transactions take place through the blockchain.
To reduce the risk of price fluctuations, they are often overcollateralized: that is, the value of the collateral exceeds the amount of the loan. For example, to get $500 worth of stablecoins, you need to deposit $1,000 in Ethereum (ETH). This way, they will be collateralized by 200%: even if the price drops by 25%, $500 worth of stablecoins will be collateralized by $750 in Ethereum. If the underlying cryptocurrency falls in price, the stablecoins will be automatically sold.
Transactions in such stablecoins are more secure and transparent. They are often tied to several cryptocurrencies at once to spread the risks. At the same time, this is one of the most complex, and therefore the least popular, groups of cryptocurrencies. The most famous of them is Dai, whose nominal value is supported at the dollar level, but is actually backed by Ethereum.
Such stablecoins are not backed by anything. In fact, the US dollar works in the same way: a few decades ago it was tied to a gold reserve, but it is stable even now because people believe in its value.
The stability of the cryptocurrency’s rate is ensured by seigniorage, the income generated by the issuance of currency and appropriated by the issuer. When demand increases, new stablecoins are issued to normalize the price. When demand falls, coins are bought to reduce the volume of currency in circulation. Theoretically, the price remains stable, as it is controlled by market demand and supply.
This is the most decentralized and independent form of stablecoin. An example of such a currency is Ampleforth (AMPL), which was launched in late 2018. Its algorithms control the volume of coins daily according to demand, to avoid the volatility inherent in collateralized cryptocurrencies.