how are you all Hope everyone is doing well, Yesterday we learned about Fiat-collateralized Stable Coin, What is Fiat-collateralized Stable Coin? And how does it work? In today's episode we will know about Crypto Backed Stable Coin in detail, What is Crypto Backed Stable Coin? and how it works, We all have a good idea about Stable Coins, Stable Coin is of 4 categories, and these 4 categories of stable coins are backed up according to different rules. For example, as Fiat-collateralized stable coin backup, they keep USD, Euro, GBP in the bank, and the large audit companies take care of those stored funds. Crypto Backed stable Coin keeps Crypto as Backup,

Image collect Pixabay

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For example, if there is 1 million Stable Coin Supply, then 1 million dollars of Crypto must be deposited in the bank for that 1 million coins, but since the Crypto price goes up and down, this Crypto collateral has some rules, but all kinds of Crypto Backup can be kept, such as BTC, ETH, LTC, USDT etc.,
So the rules are, suppose to get $500 stable coin, you have to keep $1000 Crypto Backup, in which $2 Backup is kept for every $1.
Even if Crypto is downloaded, its effect is not worn.

Let's not know the bad aspects of Crypto Backed Stable Coin.
We all know Terra Luna own USTC Stable Coin,
Many big holders held millions of USTC to keep their crypto safe, but due to the sudden crash of this stable coin, many traders made huge losses.
Crypto Backed Stable Coins have a lot of risk, because if the market crashes, it will have a bad effect on the Stable Coins.

Image collect Pixabay

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Crypto Backed Stable Coin has many popular coins among which Dai is very popular.
So I think it is better to stay away from Crypto Backed Stable Coins.
I hope everyone understands, I am ending today here, everyone be well and stay healthy, Allah Hafez,