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Decentralized Stablecoins: Who will become the leader of a trillion-dollar industry?

DeFi之道

23-02-06 13:44

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8 Potential Decentralized Stablecoins: Who will Become the Leader of a trillion-dollar Industry?

Original article by Thor Hartvigsen

The DeFi way

The Stablecoin market is the trillion-dollar industry of the future. There are some major opportunities to take advantage of if you know where to look.

Stablecoins link the DeFi industry with traditional finance and are undoubtedly one of the most important innovations in the field.

But is there a need for decentralized stablecoins? Won't most people feel safer holding $USDC after the Terra crash?

A decentralized digital world requires decentralized infrastructure -- and that certainly includes stablecoins.

Trusting centralized companies to handle billions or trillions of dollars not only goes against the spirit of the field, but it also takes greater risks...

Decentralized Stablecoins were hit hard by the Terra crash, and all stablecoins have since lost a lot of liquidity due to the overall outflow of liquidity.

So let's explore the next generation of decentralized stablecoins that are secure, scalable, and decentralized.

Here are eight potential (launched and upcoming) decentralized Stablecoin projects.

Decentralized Stablecoin projects have been launched

1 Frax Finance

$FRAX ($1 billion Market cap)

FRAX is the second largest stablecoin, with around 90% collateral.

Collateral earns revenue for the protocol and $FXS holders through AMO (algorithmic market operations) used across DeFi protocols.

Frax Finance is building a variety of products around $FRAX itself, including Fraxswap, Fraxlend, ETH liquid staking, FPI (a stablecoin pegged to the U.S. CPI). The agreement further ensures $FRAX's deep liquidity by owning a majority of $CVX and partnering with Curve Finance.

$FXS is an interesting investment because it benefits directly from the growth of $FRAX and other products developed by Frax Finance, such as frxETH.

2 Liquity Protocol

$LUSD ($228 million city)

LUSD is completely overmortgaged by $ETH alone, making it one of, if not the most decentralized stablecoins in DeFi.

The user deposits ETH (minimum mortgage rate 110%) and borrows LUSD free of interest as collateral.

The peg is maintained through a "stability pool" where users offer LUSD and participate in liquidating positions below 110%-CR in exchange for an effective yield.

I wrote about $LUSD and $LQTY last year, which you can check out here:

3 Synthetix

$sUSD ($53 million Market cap)

Users can mint sUSD (synthetic dollars) by pledging $SNX and borrowing it.

As a result, SUSDs are fully overmortgaged by $SNX, but with Synthetix V3 coming soon in 1Q / 2Q, this will change.

Synthetix V2 was released in late 2022 on Ethereum and Optimism and introduced Perps V2 and Atom Swap. Other protocols can use Synthetix as a liquidity-as-a-service offering and build on top of them.

V3 will introduce more markets and new assets as collateral to back sUSD.

4 Sperax

$USDs ($22,000 Market value)

Sperax is a small agreement on Arbitrum, with a native stablecoin fully collated by other stablecoins (57% USDC, 33% FRAX, and 10% VST).

Collateral is used to generate income that is distributed directly to holders of dollars.

In addition, Sperax recently launched Demeter, a protocol for DAOs to initiate and manage centralized pools of working capital motivated by $SPA tokens.

The figure below shows the dynamics behind $USDs and $SPA.

Next up is the upcoming Stablecoin

1 Curve Finance

Curve is launching $crvUSD, which will utilize "LLAMMA" (debit and Credit Clearing AMM algorithm) for continuous and smooth liquidation of debt positions.

This improves capital efficiency and the overall borrowing experience.

All collateral available to borrow crvUSD will be paired in a Curve V2-style liquidity pool.

As we know from the white paper, ETH will be the only collateral for the Stablecoin when it is released.

The launch is rumoured to have a number of different collateral types, including pools of working capital from Curve Finance such as Tricrypto (wBTC/ETH/USDT) or 3 Crv (USDT/USDC/DAI).

Therefore, these will have a unique LP with crvUSD. Could bring a lot of extra revenue to the deal.

2 Dopex

Dopex is a decentralized options agreement with a variety of products such as SSOV (single pledged Options Vault), Atlantic Straddle Options, Options LP, and more.

Dopex 使用两种 Token 进行操作：

$DPX -> 实用 Token

$RDPX -> 返利 Token （即将在 V2 中推出）

rDPX V2 will introduce the ability to cast synthetic hook assets by burning rDPX (deflating it). It will likely go live with dpxETH this month.

$dpxUSD is still a while away, but will be supported:

75% by dpxETH

25% by rDPX

rDPX 背后的 Token 机制将发生巨大变化，并根据对这些合成产品的需求而变得通货紧缩。

rDPX V2 has been in development for a long time and there is a lot of anticipation.

$rDPX 将是一个有趣的 Token ，用于监控接下来的几个月。

3 Aave

Aave will release their stablecoin $GHO this year.

The $GHO will be over-pledged against the assets on Aave, as the user provides collateral and borrows $GHO as collateral.

Unlike the conventional lending model, where borrowing rates are determined by the utility rate of the collateral, the $GHO borrowing rate will be set and adjusted by a so-called facilitator.

The facilitator is able to mint and destroy stablecoins on demand, thereby giving complete control over the supply of $GHO.

At first only Aave will be the coordinator, but more people will be accepted through governance.

The $AAVE pledge will be able to borrow $GHO at a cheaper rate.

4 Redacted Cartel

Redacted Cartel has been hinting at a decentralized stablecoin powered by ETH LSD.

Its white paper has not yet been released, but the following topics provide an in-depth look at some of the potential features. It's definitely worth a try. https://twitter.com/MStiive/status/1610884361506938880