Analyzing stablecoins and MakerDAO Dai
Imagine that it’s a sunny day and you go for a cup of coffee in a busy downtown coffee shop. You are paying for coffee with your Ether, and by the time you get your coffee, you have to pay 10% more Ether after 30 minutes of waiting in line. That is as crazy as it can get. Unfortunately, that is the volatility we saw in major cryptocurrencies such as Bitcoin and Ether during the crypto market crash between late 2017 and early 2018, and lately in 2022. The value of some coins fluctuated as much as 20% daily.
Stability is a major issue for cryptocurrencies looking to gain mainstream adoption in the mass market. That is where stablecoin helps. As its name suggests, it is a type of token that’s designed to smooth out the volatility of the value of coins and make them more stable in value over a certain period.
In the next subsection, we’ll cover the different types of stablecoins on the market.