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#006 Sean O’Connor: How Blockchains Make Transactions Costless, and How that Transforms Society

Smart Friends

NOTE

Types of Stable Coins and their Implications

There are two major categories of stable coins: reserve-backed stable coins, such as paxos, gemini dollar and USDC, which hold a dollar in an account for every stable coin they issue, and collateralized stable coins like maker DAI, where a stable coin is minted by entering ETH into a smart contract. The interest rate is variable, and the collateralization rate is monitored by smart contracts, with the risk of losing assets if the position goes underwater.

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