How to build a true stable coin: lessons from Luna/TerraUSD, traditional currencies and US banking history
Abstract:
The rapid collapse of the TerraUSD stablecoin has captivated the crypto community. Stablecoin pursues price stability by using reserve assets as collateral or controlling supply via algorithmic formulas. In spite of their common claim of stability, different stablecoins use different mechanisms, and many are not “stable.” In this article, we review lessons on how to build a true stablecoin by drawing insights from the stabilization of traditional currencies and US banking history.
