After the events behind the digital currency, market participants were hesitant about how much they would be able to put their eggs in the basket of stable coins and open an account in them. One expert believes that the creators of these stable coins should think of a way to decentralize them with specific applications.
According to the Quinn Telegraph, the decline in the price of USTra Coin Stable has shown that several questions need to be answered about what makes Stable Quinn usable among growing market participants.
Sang Lee, co-founder of VegaX Holdings, a digital currency service provider, prefers to focus on decentralized coins over decentralized ones, but believes an important indicator is how much people gain trust. Problems like this can happen.
In an interview on May 13, Lee described the stable as one of the most important tools in the digital currency ecosystem, giving traders a common unit of account, such as the role of the US dollar in world markets. But it should be noted that the method of maintaining this application is also important.
Lee says in this regard:
The most important feature of a stable coin is that it sticks firmly and keeps the price stable. Otherwise, the unit of account is shared, unreliable, and then unusable.
According to Lee Stable, coins can be really useful when people trust them enough. But this seems paradoxical, because people, on the other hand, trust a stable coin that is used by others. In order for the developers of these stable coins to overcome this contradiction, Lee believes, they must be sure of one thing before they can be built. They need to know that “gaining trust is much more important than the amount of collateral that keeps coins stable”.
Confidence and design issues were at the forefront of the debate over the collapse of the stable UST coin. The price of Luna, Terra’s own token and the price of bitcoin collateral for this stable coin fell, after which the digital currency community quickly lost confidence. In addition to this loss of confidence, the decline in usage was further caused and this significantly reduced the value of this digital currency.
Today, there are at least 97 stable coins in the digital currency industry, most of which are denominated in US dollars. While this number of stable coins may seem excessive at first glance, Lee said the number of stable coins should be high and a large number should be decentralized.
“We don’t want a stable Quinn to take over the market and govern others, we want to prevent that in the first place,” Lee said. Among the top five stable coins on the market, only Dye (DAI) and Magical Internet Money (MIM) have decentralization plans.
Of course, Lee does not believe that we should expect the current stable stable coins to be decentralized very quickly, but at least they should have a path to decentralization in the future. According to Lee, the vital problem that digital currencies are trying to deal with is the lack of transparency and accountability, and the lack of this factor may be the most important factor in the failure of today’s centralized digital currencies.
Encouraging a more decentralized future for digital currencies, Lee advised practitioners to focus more on collaboration and partnership rather than on useless challenges.
According to Lee, we can move the world towards a blockchain-based ecosystem, which is generally a good thing, but it is better to talk about the really important issues of the blockchain, instead of concluding that our technology is better than another.
The publication Is the consistency of stable coins or the volume of collateral? An expert’s answer first appeared in Digital Currency.