Stablecoins That Are Collateralized With Fiat Currency 

For a token to be fiat-backed, a company or central entity must manage fiat currency reserves and issue a corresponding amount of tokens in the crypto market. The company is the custodian of fiat reserves. Therefore, holders of these fiat-backed tokens are choosing to trust the central entity. Holders may seek to verify reliability by examining periodic audits, but ultimately the involvement of the central authority means the holder is involved in a relationship that involves trust.

Benefits • Simplicity: The fiat-backed structure is easy to understand.

• Stability: Fiat currencies from countries with a strong and relatively stable economy are perhaps the most stable assets available. For instance, the USD is very stable so international business deals often use it as a “unit of account” — a way to measure and describe value that does not change a lot over time. Several popular stablecoins are backed with fiat USD.

Disadvantages • Centralized: this structure is always highly centralized and therefore subject to various vulnerabilities and risks.

• Requires trust: the central entity must be trusted for the full functioning of the system, which goes against the principle of decentralization of cryptocurrencies. External audits are required to verify the credibility of the accounts.

• Regulatory Risk: Anything involving Fiat in the cryptocurrency market today would require greater supervision and regulation. For example, Tether continues to categorically reject any public audit, and the institutions responsible for issuing the dollar may soon rebel against this lack of transparency.

Stablecomp Stablecoins are used to fund many activities in DeFi. People provide liquidity for DeFi activities by staking stablecoins in pools that yield interest.

Stablecomp is a utility token-powered platform for assessing risk in stablecoin staking pools. Eventually, Stablecomp may strive to support all Stablecoins to offer freedom of choice, a key component of true decentralization. In the near term, Stablecomp will support the most popular stablecoins.

Learn more about Stablecoins in our article series: What are stablecoins? Stablecoins collateralized by fiat currency Stablecoins collateralized by cryptocurrency Stablecoins collateralized by commodities Algorithmic stablecoins

Learn more about Stablecomp and how it can help you earn high returns with low risk. Check our homepage for more details and Follow our channels:

🌐 Website|✈️ Telegram | 🐤 Twitter

Support Stablecomp 

Please contact us. Let's start working together!

Stablecomp logo
© Stablecomp, 2024.
All rights reserved.
Design and code:
Giorgia Bagnasco