What is stablecoin?


Dear Coinmates,

Did you ever wonder why there isn’t any crypto that would be more stable in terms of exchange rate? Do you need some fixed value currency other than a standard FIAT asset?

If so, there are stablecoins! 

We recently introduced DAI trading pairs, so it is the best time to write a few words about stablecoins in general and DAI itself. For those of you wondering what it actually is and how it works.

Since crypto became popular, its price got very volatile. That is a great thing for trading, but could be a nightmare for savings or for payments. Do you remember this one? One friend is asking another: “could you lend me 100 $ worth of bitcoin?” and his friend replies: “Well, I don’t have 0.1 BTC on my wallet. But wait a minute. Yup, I can borrow you those 0.7 BTC right now. Ooooh, wait, it’s too late again.” It wasn’t ever that dramatic of course, but for those of us wanting to use crypto and being sure that the amount of money on our savings account is the same every day without the need of setting up price alerts or checking graphs every morning, there was something missing.

To fill this gap, there are stablecoins. Due to the very nature of crypto, it is not possible to regulate it centrally to handle exchange rate change caused by trading for example. But it is possible to back it by other crypto, FIAT currency, or any other asset (gold, real estates, etc.). By this way, you can get a crypto that holds its price, it is much less volatile and therefore suitable for savings or as a stable trading asset.

We implemented DAI because it is not backed directly by any other crypto or FIAT currency. Its price is maintained through Ethereum blockchain smart contracts, holding its market price same as USD market price. Therefore you can have an USD equivalent on Coinmate, as well as a true stablecoin maintaining its price with much less volatility compared to traditional cryptos. If you’d like to read more in-depth description of its functionality, please refer to DAI whitepaper on its official site.

If you were missing USD on Coinmate, here it is, as well as a stablecoin suitable for your trading strategies, or savings.

Stay tuned for more good news to come, yours truly, Coinmate.io team