The Rise Of Algorithmic Stablecoin In The Cryptoecosystem

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INTRODUCTION

Basically, the volatile and unpredictable characteristics and nature of the cryptocurrency network is one that is significantly disturbing and challenging however, for the purpose of hedging and mitigating this property, features and characteristics, stablecoins were created, developed and introduced.

The stablecoin is basically a type of cryptocurrency that was designed to have the feature and characteristics of stability and predictability, meaning that the value of this cryptocurrency is stable and this stability is ensured by basically pegging the value or price of the cryptocurrency to a fiat currency like the US dollar.

Since the creation of the stablecoin, it has experienced and undergone many different aspects, stages and forms of growth and development therefore, in this post of mine I am going to be discussing and explaining some of the different stages and aspects of growth in the algorithmic stablecoin four to be precise, to help you all understand.

• CONCEPTUALIZATION

Basically, the first stage and aspect in the growth, rise and development of the algorithmic stablecoin is called or known as conceptualization, this aspect and stage of the algorithmic stablecoin growth and development, has to do with or involve the process of developing the idea of addressing the cryptocurrency issues of volatility and creating a stable cryptocurrency.

The stablecoin was to be a cryptocurrency that possesses the stability of fiat currencies although the way it was to attain this was not through attaining a collateral but rather through cryptographic algorithms, the decentralized nature and feature of the stablecoin was not be compromised or sacrificed for its stability because decentralization is a fundamental feature of all cryptocurrencies.

Additionally, the conceptualization stage and aspect of the algorithmic stablecoin growth basically involves the formulation and discussion of theories and basic rules, principles and guidelines that will form the ground work on which the stablecoin operates and is governed such as supply adjustment mechanisms and smart contracts.

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• THE DESIGN AND DEVELOPMENT

After the concept of the algorithmic stablecoin has been fully formulated and established, the next stage and aspect in the growth and development is design and development, it basically involves taking the needed and required steps and actions to design and develop it and bring it into reality, implementing mechanisms like smart contracts and other algorithms.

Additionally, this process of design and development, will basically be used to analyze and address the factors and mechanisms that would cause and lead to weaknesses, vulnerabilities and strength in the stablecoin this process also involves implementing mechanisms that would determine how the algorithmic stablecoin would operate under different conditions.

Furthermore, another aspect of this growth stage is testing, testing is very important seeing as it gives developers the opportunity to see firsthand how the different mechanisms and algorithms would operate during launch as well as make required and suitable adjustments where necessary.

• LAUNCH AND ADOPTION

The launch and adoption stage is the stage in the algorithmic stablecoin growth and development where by the algorithmic stablecoin is being marketed and introduced to the public through every means possible, this stage basically involves raising awareness about the introduction of a solution to the volatile nature of cryptocurrencies which is basically a stable cryptocurrency.

Additionally, during this process of launch and adoption, the stablecoin's algorithm is going to be further tested to prove to the new or potential investors, stakeholders and users that it is ready to begin to interact and be applied with real world market conditions and the success of any newly launched blockchian or cryptocurrency project largely depends on its ability to gain the trust and attention of users and investors.

• STABILITY MECHANISM

The stability mechanisms are basically measures and tools implemented in the algorithmic stablecoin so as to ensure that once the stable coin has been launched and is being used in the cryptocurrency market, it would be able to maintain its stable nature and feature by remaining pegged to its fiat currency which could be the US dollar etc.

Additionally, these stability mechanisms may include supply adjustments, which basically is the algorithm that is responsible for increasing or decreasing the supply rate of the stablecoin in response to the changes in demand, the algorithm may trigger an increase in the supply of the stablecoin when demand rises, thereby preventing the price from exceeding the value of the fiat currency it is pegged to

It also triggers a decrease in the supply when demand reduces or falls so as to prevent the price from dropping below that of the fiat currency it is pegged to, the effectiveness of these stability mechanisms is basically a significant and pivotal factor that the determines the success of stablecoins of a long period of time.

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CONCLUSION

In conclusion, I would like to use this opportunity to say a very big thank to everybody who made the time and effort to read and go through this post which I have made, and I hope that you have been able to learn a few things as I made this post with the aim of helping you all understand the different growth and development stages of the algorithmic stablecoin.