Stablecoins

A stablecoin holds a steady value against a reference, almost always the US dollar, and the way it does so decides what can go wrong. Fiat-backed tokens hold reserves and depend on an issuer, its custodians and its banks. Crypto-backed tokens are over-collateralised on-chain and depend on liquid collateral and working liquidations. Algorithmic designs rely on incentives, and have failed repeatedly.

Our coverage follows the parts that actually break: what the reserves are made of and how quickly they convert to cash, who can redeem at par and who is left with the secondary market, and how regulation in the EU and the US is reshaping which tokens are available where.