Decentralization stablecoin Depth Observation: Intense Competition in the Track, Hope Still Exists

Original stablecoins are the source of currency. Throughout human history, decentralized currencies have existed. Whether it is the theory of currency as barter or the theory of debt formation of currency, centralized credit was not involved in the currency generation process from the beginning.

The necessity of decentralized stablecoins lies in:

1. Centralized stablecoins do not have minting rights. What we pursue is the alchemy of the information age, hoping to create stable credit free from centralized power.

2. Centralized stablecoins face the threat of centralization. The credit of stablecoins can be questioned due to the credit flaws of the center, and their value is often challenged.

3. Decentralized stablecoins have an inherent market. Users sensitive to centralized risks will choose decentralized stablecoins, even if they have to bear other costs and risks.

Currently, the stablecoin industry is dominated by USDT and USDC, which account for the vast majority of the market share, but there are hundreds of other types of stablecoins. The business forms of stablecoins can be divided into:

1. High-energy coins: such as USDT, USDC and other mainstream stablecoins, have high liquidity.

2. Broad money: Most small-scale stablecoins need to be exchanged for high liquidity tokens through trading pairs with mainstream stablecoins.

3. Lending System: Some small-scale stablecoins are pegged to mainstream stablecoins through trading pairs, effectively equivalent to over-collateralized lending.

From the perspective of stability creation methods, there are mainly the following types:

1. Rebalancing stablecoin: such as AmpleForth, stabilizes the price by adjusting the number of tokens.

2. Restrict the circulation of stablecoins: such as FEI, limit buying and selling when the price deviates from the target.

3. Minting stablecoin: such as UST-Luna, stabilizes the price through the interaction between stablecoins and volatile coins.

4. Over-collateralized stablecoins: such as DAI, LUSD, using debt as the basis for issuance.

In the fully decentralized stablecoin space, there are currently major projects such as Liquity, Inverse.finance, and RAI. They all face challenges such as difficulties in scaling and insufficient liquidity, but each has its own characteristics and innovations.

Overall, the stablecoin sector is highly competitive, with centralized stablecoins dominating the market. However, decentralized stablecoins still have their inherent market, and there are opportunities for future development. The key is to seek a balance between decentralization, security, and efficiency, while constantly innovating mechanisms to scale and enhance liquidity.