This article was prepared for the link3 project, as part of a contest of posts.

Stable coins have become a popular alternative to traditional cryptocurrencies and fiat currencies. What is the current situation with stable coins and how have they evolved over time? What are the main players in the stable coins market, and how do they differ from each other in terms of technology, usage scenarios, and adoption?

The Tehter token was launched in 2015 by Tether Limited. Soon there were rumors in the cryptocurrency community that this company was associated with the Bitfinex exchange platform, which was the first to integrate this token into its service. Thanks to Paradise Papers' investigations, this connection was confirmed.

On January 30, 2018, Bloomberg news agency published information that the Commodity Futures Trading Commission sent subpoenas to Bitfinex and Tether Limited. The reason for this was the regulator's doubts as to whether the 2.3 billion tokens issued by Tether are actually backed by the same amount of U.S. dollars. Since then, the cryptocurrency community has been abuzz about whether or not this stable coin is being audited correctly.

On March 14, 2019, the company said that "backing" the tokens now means not only securing them with cash U.S. dollars, but also securing them with loans made to Tether Limited's sister companies, as well as investments in U.S. Treasury securities.

Stable coins have become a very important part of cryptocurrencies; they are a measure of value preservation, a profit-fixing tool, and a full participant in defi.

Over time, algorithmic stable coins have emerged - their price (of $1) is backed by other cryptocurrency assets, as well as complex formulas for burning, new issuance and price retention.

Unfortunately, algorithmic stablecoins have not become a panacea for security because (absurdly, yes) they are backed in part by "Fiat" stablecoins.

Today we share two types of stable coins:

1. Asset backed

2. Algorithmic.

Top 3 among the backed ones:

1. USDT

2. USDC

3. BUSD

TOP3 among the algorithmic ones:

1. DAI

2. FRAX

3. RAI/FEI

Despite the availability of alternatives (not all issuers appear in my ratings), the market gives preference to USDT.

Perhaps 70+% of liquidity in trades is provided solely for this stable coin.

The market is facing the collapse of Terra and its stable coin UST in 2021. It became apparent that algorithmic stable coins carry a tremendous risk of price detachment, including due to events such as:

• FUD

• Bank-run

• Protocol problems and vulnerabilities

• The pyramidal nature of yields

In the same year, pegging problems were in the stable blockchain coins Waves and NEAR. Both projects abandoned the idea of continuing to develop their stablecoins

In 2023, another problem surfaced - the capital and collateral of a number of stable coins, is in the banks, whose financial performance, as well as illiterate management led to their bankruptcy. I suppose the risk of further deterioration in the U.S. financial sector has not gone anywhere and we will see more headlines in the future.

The last stone in the garden of stable coins was "sanctions" in relation to stable coin BUSD, which is issued by Paxos (one of the leaders in the market) for Binance exchange. No new BUSD will be issued from 2023, which strongly affects the exchange's past plans to move all trading to BUSD

As of today, the main problems in the stable coin segment are:

1. Regulators (mostly from the U.S.) who are concerned about the reliability of stable coin systems;

2. Vulnerabilities in the protocols that ensure a stable coin is pegged to $1;

3. lack of transparency in a number of stable coins, including algorithmic coins, due to their linkage to stable coins that are not algorithmic.

What does the market need?

1. higher frequency of audits

2. creation of 100% algorithmic stable coins with no connection to backed real assets, but only cryptocurrencies

Which, in my opinion, puts us on the threshold of important changes!

The introduction of digital currencies by central banks. The fact is that the main objective of central bank digital currencies (CBDC) is to total control of the money supply. According to the project of CBDC in the Russian Federation and the adoption of the law on their implementation in the first reading, the following conclusions can be made:

1. it is not a cryptocurrency.

2. Despite the claimed decentralization, all nodes will be controlled by the regulator

3. Each individual ruble/dollar will be labeled and have its own "trace".

4. The user of "digital currency" carries the risk of being disconnected from the system

In this context, I have a panic fear of becoming a slave to the system, and in this context what I most want to see in the cryptocurrency market is not just a stable coin with a peg in fiat currency, but an index asset, with the ability to fully digitize the market.

As long as we trade "in dollars" we are in direct correlation with the U.S. stock market, Powell's speeches, and even damn near inflation.

Crypto was created for freedom! Let's create a free market that works like a sandbox!

Thanks for reading. Don’t forget to collect.

Best regards

This article was prepared for the link3 project, as part of a contest of posts.

Stable coins have become a popular alternative to traditional cryptocurrencies and fiat currencies. What is the current situation with stable coins and how have they evolved over time? What are the main players in the stable coins market, and how do they differ from each other in terms of technology, usage scenarios, and adoption?

The Tehter token was launched in 2015 by Tether Limited. Soon there were rumors in the cryptocurrency community that this company was associated with the Bitfinex exchange platform, which was the first to integrate this token into its service. Thanks to Paradise Papers' investigations, this connection was confirmed.

On January 30, 2018, Bloomberg news agency published information that the Commodity Futures Trading Commission sent subpoenas to Bitfinex and Tether Limited. The reason for this was the regulator's doubts as to whether the 2.3 billion tokens issued by Tether are actually backed by the same amount of U.S. dollars. Since then, the cryptocurrency community has been abuzz about whether or not this stable coin is being audited correctly.

On March 14, 2019, the company said that "backing" the tokens now means not only securing them with cash U.S. dollars, but also securing them with loans made to Tether Limited's sister companies, as well as investments in U.S. Treasury securities.

Stable coins have become a very important part of cryptocurrencies; they are a measure of value preservation, a profit-fixing tool, and a full participant in defi.

Over time, algorithmic stable coins have emerged - their price (of $1) is backed by other cryptocurrency assets, as well as complex formulas for burning, new issuance and price retention.

Unfortunately, algorithmic stablecoins have not become a panacea for security because (absurdly, yes) they are backed in part by "Fiat" stablecoins.

Today we share two types of stable coins:

1. Asset backed

2. Algorithmic.

Top 3 among the backed ones:

1. USDT

2. USDC

3. BUSD

TOP3 among the algorithmic ones:

1. DAI

2. FRAX

3. RAI/FEI

Despite the availability of alternatives (not all issuers appear in my ratings), the market gives preference to USDT.

Perhaps 70+% of liquidity in trades is provided solely for this stable coin.

The market is facing the collapse of Terra and its stable coin UST in 2021. It became apparent that algorithmic stable coins carry a tremendous risk of price detachment, including due to events such as:

• FUD

• Bank-run

• Protocol problems and vulnerabilities

• The pyramidal nature of yields

In the same year, pegging problems were in the stable blockchain coins Waves and NEAR. Both projects abandoned the idea of continuing to develop their stablecoins

In 2023, another problem surfaced - the capital and collateral of a number of stable coins, is in the banks, whose financial performance, as well as illiterate management led to their bankruptcy. I suppose the risk of further deterioration in the U.S. financial sector has not gone anywhere and we will see more headlines in the future.

The last stone in the garden of stable coins was "sanctions" in relation to stable coin BUSD, which is issued by Paxos (one of the leaders in the market) for Binance exchange. No new BUSD will be issued from 2023, which strongly affects the exchange's past plans to move all trading to BUSD

As of today, the main problems in the stable coin segment are:

1. Regulators (mostly from the U.S.) who are concerned about the reliability of stable coin systems;

2. Vulnerabilities in the protocols that ensure a stable coin is pegged to $1;

3. lack of transparency in a number of stable coins, including algorithmic coins, due to their linkage to stable coins that are not algorithmic.

What does the market need?

1. higher frequency of audits

2. creation of 100% algorithmic stable coins with no connection to backed real assets, but only cryptocurrencies

Which, in my opinion, puts us on the threshold of important changes!

The introduction of digital currencies by central banks. The fact is that the main objective of central bank digital currencies (CBDC) is to total control of the money supply. According to the project of CBDC in the Russian Federation and the adoption of the law on their implementation in the first reading, the following conclusions can be made:

1. it is not a cryptocurrency.

2. Despite the claimed decentralization, all nodes will be controlled by the regulator

3. Each individual ruble/dollar will be labeled and have its own "trace".

4. The user of "digital currency" carries the risk of being disconnected from the system

In this context, I have a panic fear of becoming a slave to the system, and in this context what I most want to see in the cryptocurrency market is not just a stable coin with a peg in fiat currency, but an index asset, with the ability to fully digitize the market.

As long as we trade "in dollars" we are in direct correlation with the U.S. stock market, Powell's speeches, and even damn near inflation.

Crypto was created for freedom! Let's create a free market that works like a sandbox!

Thanks for reading. Don’t forget to collect.

Best regards