Introduction of a Decentralized and Algorithmic Stablecoin
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Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyser. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
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Before explaining Decentralized and Algorithmic Stablecoin, I will briefly explain Stablecoins according to my understanding. Stablecoins are kind of Coins or Tokens that always holds their value to the standard USD price. It means, the value of these Stablecoins should always stay at the 1$ rate.
Now let's come to the point of Decentralized and Algorithmic as I have already mentioned in the Topic. So, we should have a better understanding of Decentralized Coins or Tokens. Simply, here we can't see any centralized authority in the whole process or mining process. Of course, our popular USDT is a kind of centralized Stablecoin based on the ETH blockchain and created or mined by the Tether network Limited.
However, there are some additional Stablecoins that act as Decentralized and Algorithmic Stablecoins. The best example for this type of category is the UST or Terra USD which runs on the Terra blockchain. Both Stablecoins are pegged as the value of 1$. But, the mining process is completely different.
USDT is mined by sacrificing actual USD at a 1:1 rate and any amount of USDT can be mined by using this method. Therefore, the value of this Token is always 1 standard USD. However, UST is slightly different compared to this centralized USDT Token. Here they have created a specific algorithm to keep the value of this UST token at the standard 1 Dollar rate. At the same time, these UST tokens are created by burning Luna Coins which is a very famous coin in the world.
When the price of this UST token increases, the algorithm works and UST will be converted to Luna. On the other hand, when the price of this UST token decreases, the algorithm works and Luna Coins will be converted to UST tokens. In this way, the algorithm will always process to keep the scalability of this UST token in an effective manner.
These Decentralized and Algorithmic Stablecoins are completely decentralized Tokens or Coins which means that there is not any central authority to take ownership of these Tokens.
Therefore, a single party can't control or change these Tokens or coins according to their willingness. That is a very important factor to keep the salability of these Tokens or coins as compared to other centralized stable assets. There are some advanced Algorithms to control the price stability of these Tokens and that Algorithm will always keep the value of these Tokens at a certain level.
Especially, the Transaction fees are very low in these Decentralized and Algorithmic Stablecoins such as UST coins which run on the Terra blockchain. At the same time, the Transactions speed will be very high as the Terra Luna blockchain is a very fast and scalable network as compared to many other networks.
First of all, let me expand an Overview of this Terra Luna Based Project. Below I have included a screenshot that I have taken from the Official website of this Terra Luna project.
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According to the above-attached screenshot, we can clearly see the Power of this UST token. So, this Protocol is a completely open-source network-based project and this UST token has been created as a result of this project. And also, a lot of big investors have invested in this Stable asset as it takes higher priority from its security itself.
According to the above-mentioned facts, I believe that the usefulness of this project will be increased due to its higher scalability. Therefore, I have also invested in this Stable coin as a passive income and I can get a certain value of UST token daily to my Binance wallet by staking these Tokens on the Binance Earn section. You can see my UST token amount from the right side of this paragraph.
I'm showing this only for motivation and don't invest in this Token without doing your own analysis as all the things are not 100% efficient in the world according to my point of view.
I have studied the below-sourced articles to further study these topics and I have explained all the above facts in my own words.
10% benificiary set for @tron-fan-club
Twitter Shared
https://twitter.com/moneyster12/status/1516829626508759048?s=20&t=04xaCSWBZEBwXmuG4f_iCQ
You discussed with us today about Decentralized and Algorithmic Stablecoin. Your discussion, however, has been very nice and constructive.
Thank you very much for your detailed appreciatable comment brother.