The Four Types of Stablecoins: A Comparative Analysis

Authors

  • Matthias Hafner Cryptecon - Center for Cryptoeconomics
  • Marco Henriques Pereira University of Zurich https://orcid.org/0000-0002-9758-9805
  • Helmut Dietl University of Zurich
  • Juan Beccuti Informal Systems

DOI:

https://doi.org/10.5195/ledger.2024.326

Keywords:

Crypto Currency, Stablecoin, Economic simulation

Abstract

Stablecoins have gained significant popularity recently, with their market cap rising to over $180 billion. However, recent events have raised concerns about their stability. In this paper, we classify stablecoins into four types based on the source and management of collateral and investigate the stability of each type under different conditions. We highlight each type’s potential instabilities and underlying tradeoffs using agent-based simulations. The results emphasize the importance of carefully evaluating the origin of a stablecoin’s collateral and its collateral management mechanism to ensure stability and minimize risks. Enhanced understanding of stablecoins should be informative to regulators, policymakers, and investors alike.

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Published

2024-12-02

How to Cite

Hafner, M., Henriques Pereira, M., Dietl, H., & Beccuti, J. (2024). The Four Types of Stablecoins: A Comparative Analysis. Ledger, 9. https://doi.org/10.5195/ledger.2024.326

Issue

Vol. 9 (2024)

Section

ChainScience Invitational Articles

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Copyright (c) 2024 Matthias Hafner, Marco Henriques Pereira, Helmut Dietl, Juan Beccuti

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