The One Thing Every DeFi Investor Should Know About Stablecoin Risks!
Avoid DeFi disaster
The past week has been turbulent for the decentralized finance (DeFi) sector. A significant portion of it faced the possibility of collapse, with the USDC stablecoin losing its peg. Despite USDC eventually stabilizing and returning to a trading value of $1, it is imperative not to overlook this incident. As DeFi Ignas aptly pointed out, a chain is only as robust as its weakest link.
Stablecoins are currently among the primary use cases for cryptocurrencies. It is evident that we require fully decentralized stablecoins to minimize the impact of bank or centralized custodian collapses on this industry. In this thread, we will examine some of the most reliable decentralized stablecoins currently available, as well as some of the most intriguing upcoming ones.
Furthermore, I am pleased to announce that our newsletter will henceforth be more focused on alpha aggregation. Each week, we will deliver a new issue featuring the weekly alpha, a selection of curated readings, the most engaging threads/tweets on a trending DeFi topic, and some quick thoughts.
The recent USDC depeg serves as a reminder that the largest decentralized stablecoins may not be as decentralized as one would assume.
The two biggest decentralized stablecoins in the market heavily rely on USDC as a support system. Consequently, any adverse event affecting USDC could potentially have severe ramifications on $DAI and $FRAX.
Whether you're seeking a stablecoin that isn't reliant on centralized support systems or you're interested in trading the thriving narrative of decentralized stablecoins, it's crucial to understand the underlying protocols that support the most resilient stablecoins.
Here are some of the most robust ones: