On May 13, following the implosion of Terra’s stablecoin, Circle’s CFO Jeremy Fox-Geen published a blog post titled “How to Stay Stable.” Circle’s CFO explained that since the inception of the dollar coin, the goal of the stablecoin is to be “the most transparent and trustworthy dollar digital currency.”
Terra’s stablecoin decoupling event becomes the focus of the entire stablecoin economy
Stablecoin assets have been a popular hedging tool for many players in the cryptocurrency community for several years. Recently, stablecoins have been lent out in large numbers for interest and high-yield returns. In the early days, stablecoins were centralized projects, and now there are some decentralized algorithmic stablecoins among giants.
Tether (USDT) and USD Coin (USDC) They are the two largest stablecoin projects by market capitalization. They are all centralized, which means the company guarantees that stablecoins can be exchanged for parity at $1 by holding reserves that cover circulating funds. Even before Terra’s stablecoin decoupling event, there was more confidence in the first two stablecoins because they were centralized.
Three days ago, Bitcoin.com News report Following our news desk’s recent editorial on the stablecoin shuffle, it was revealed that for the first time in history, three stablecoins Enter Top 10 cryptocurrencies. This is still the case today, except that terrausd (UST) was knocked out of the top 10 cryptocurrency market cap and the stablecoin BUSD took the coin’s place. CEO of Circle Financial after terrausd (UST) implodes Jeremy Allaire already speak to the media Regarding what makes USDC different, he believes that “more regulatory frameworks around stablecoins are needed.”
We are working on strengthening trust and transparency with USDC, stay tuned for more information, but here’s a new blog post from @circlepay CFO Jeremy Fox-Geen, and one of the threads below breaks it down: https://t.co/SYNpwYxUif
— Jeremy Allaire (@jerallaire) May 13, 2022
Circle CEO Says Company Is Increasing Trust and Transparency Efforts
On Friday, Allaire tweeted that Circle is “upping its efforts” when it comes to “trust and transparency” in USDC. Allaire also shared a blog post written by the company’s CFO, Jeremy Fox-Geen, who summed up what Allaire means about transparency.Fox Jean blog post Explaining that “USDC has always been backed by the equivalent of USD-denominated assets.” The CFO further noted that these funds are held by leading U.S. financial institutions such as Bank of New York Mellon and blackstoneThe report from Circle executives added:
USDC reserves are held entirely in cash and short-term U.S. government bonds, including U.S. Treasuries with maturities of 3 months or less.
Circle’s CFO details the company’s release monthly proof From Grant Thornton International, a leading accounting firm. “USDC reserves are worth at least as much as the amount of USDC in circulation, providing a reputable third-party assurance to the USDC ecosystem,” Fox-Geen concluded in a blog post. “USDC is always convertible 1:1 to U.S. dollars,” added the Circle executive.The blog post concludes that there are thousands of projects and entities that support and facilitate USD/USD in 190 countries.
— Jeremy Allaire (@jerallaire) May 15, 2022
While Terra’s algorithmic stablecoin is languishing, there are still some decentralized fiat-pegged tokens that many crypto proponents see as necessary
Meanwhile, some decentralized and algorithmic stablecoin assets exist today, such as LUSD, DAI, FEI, MIM, USDV, and USDD.For example, the Ethereum-based Makerdao project utilizes the overcollateralization method to back stablecoins Wear. TRON recently introduced An algorithmic stablecoin token called USDD, and a blockchain project called Vader has a native algorithmic stablecoin called USDV.Another stablecoin asset known as Magic Internet Money (MIM) is built on Avalanche (AVAX) Issued by Abracadabra, a decentralized lending platform.
This is an important point!
LUSD is technically an algorithmic stablecoin.
Not all algorithmic stability is created equal.
We need to be careful how we explain these concepts to new gunmen trying to bully us. https://t.co/GHe3lH4bt1
— Chris Blec (@ChrisBlec) May 15, 2022
Proponents of decentralized and algorithmic stablecoins argue that centralized heavyweights like this need them USDT and USD/USDProponents of such assets argue that centralized stablecoins would suffer the same failure, while others argue that decentralized and algorithmic stablecoins outperform centralized models because they cannot be frozen by issuers. Despite these benefits, centralized stablecoins have taken hold, and crypto users have more confidence in them, at least for now.
What do you think of centralized stablecoins and Circle’s recent blog post on transparency and token reserve support? Let us know what you think about this topic in the comments section below.
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