What is the purpose of a stablecoin? What is a stablecoin supposed to do? Why should we care about stablecoins?
I think I know some answers to these questions, but for me the bottom line is this: they are pegged to some more-widely accepted asset in order to maintain value within a minimal range of fluctuation.
However, some stablecoins are superior to others even if they are functionally equivalent. So what makes these stablecoins more superior to their peers?
Unlike NFTs, I understand stablecoins good enough to explain them to people and even to use them myself. There's just one question I cannot answer: Why should I care about them?
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Well, I'm not an expert by any means but I think one of the main points of stablecoins is to enable the usage of crypto as payment. It will be easier for businesses and people to accept crypto knowing that their margin won't get crushed hours after they make a sale because the crypto they got as payment just went down 15%
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People are so used to treating cryptocurrencies like stocks (BTC, ETH, etc.) that they forget that they were originally meant to be used as a form of payment. After all, it took a while for someone to use BTC to pay for pizza years before it occurred to anyone to HODL BTC for its price. Stablecoins are closer to the origins of crypto in this sense.
Since stablecoins are pegged in some way or other, their value seems limited, so it's not obvious how people can make money from owning stablecoins. This is where I find myself stuck. For me, it's just a way to get crypto out of a centralized exchange; but after that I don't know how I can make money with stablecoins. Not even big money: just enough (for example) to make up for any fees I've paid out in other, unrelated, transactions.
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I think it's the best way for people to value money. The USD is the world's reserve currency and having dollars represent the value makes it easier to see how much crypto is worth. At the same time, they should be worth $1 so it puts investors at ease when they want to move to cash.
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USD is still the King of Currencies, so it makes sense to have stablecoins pegged to it. Other major currencies have corresponding stablecoins. Then there are stablecoins pegged to physical commodities such as PAXG (gold).
UST is TerraUSD, the stablecoin pegged to USD on the Terra (LUNA) network. This network also has a wide range of stablecoins for other fiat currencies. I wonder how the UST situation is affecting those Terra stablecoins.
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I don't think there are any other Terra Stablecoins because it wouldn't make sense but I could be wrong.
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With nearly 200 fiat currencies floating around, there wouldn't be 200 Terra-based stablecoins, but there are enough to cover the top 10 to top 20 fiat currencies in ForEx, especially regionally.
With the recent slump in BTC, XRP and Stellar are getting clobbered as well. While not stablecoins, these two may get a second look as payments coins or as alternatives for services such as Western Union money transfer.
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I guess it could but I think those pools have huge IL as a people scramble to toss UST into other stablecoins to save whatever they can.
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