The illusion of tranquility. Who and why stabilini


Fund Manager Aurora Blockchain Capital Dmitry Smirnov, in his newspaper column “RBC-Crypto” describes a new trend in the blockchain-industry “stable” tokens that are tied to traditional assets

On the market the blockchain technology is a new trend: a special type of cryptocurrency called stabilini in fashion, the excitement is beginning to resemble the boom of the ICO last year. Only this time it’s a little different. The creators of these assets do not promise multiple quotes growth, they guarantee their complete stability.

Stabilini (stablecoins) — digital assets that minimize fluctuations in its price. To achieve this result, it is proposed several methods. The easiest bind the value of cryptocurrency to reliable tools, such as the U.S. dollar. The issuing company is similar to the token ensures that each unit of the cryptocurrency dollars in a ratio of 1 to 1.

One of the main obstacles to the use of cryptocurrencies — their insane volatility and are designed to address stabilini. It’s one thing to speculate in cryptocurrencies, and quite another — to carry on business in them. Willing to pay or even have short-term liabilities in the asset, the cost of which may rise or fall by tens of percent in a matter of hours, it is obvious enough.

While growth in the value of cryptocurrencies and their volatility few people worried — speculation was the main way to use the cryptocurrency. But this year after falling prices by 70-90% dust players faded, but the old problem remained. Now a new team of developers vying with each other trying to offer the market calm that had been missing for the past year.

The growing popularity of

For the last four years was established on 23 stablein, most of them appeared in 2018. 34 cryptocurrencies are being run, judging by the numerous statements in the media, in the coming year we can see more than 50 new coins.

Among the key developments is the successful establishment of Gemini Dollar, cryptocurrency exchange, the American brothers Winklevoss. Also on the market stabilio out PwC. Consulting giant in collaboration with startup Cred plans to create a cryptocurrency pegged to the US dollar, able to attract up to 100 million users. A similar project, Stronghold USD was already running IBM.

At the same time one of Japan’s largest Internet companies, GMO plans to issue a cryptocurrency pegged to the yen. Already exist and will be released in the future, the tokens that are backed by precious metals, Swiss franc, pound sterling, yuan and other assets.

The ambiguity stability

Almost all stabilini can be classified into two categories: asset-backed and algorithmic. The most striking example of the first category is the Tether, based on the American dollar.

Token with a market capitalization of $2.5 billion, is trading at 46 sites and occupies the third place on volumes of trade among all cryptocurrencies. Among stabilio to Tether consistently accounted for more than 99% of all trading activity. It is used on most exchanges as the cryptocurrency equivalent of the U.S. dollar.

Despite this, the Tether is constantly accompanied by a negative news background. The cryptocurrency accused of a lack of transparency, incomplete security, and excessive centralization. Also repeatedly published the study proving the link between emissions USDT with manipulated quotes of other coins. Repayment of crypto-currencies in dollars is unavailable, and the Issuer Tether Limited issued a statement, essentially not giving the owner any legal rights.

The company shows the main disadvantages of most asset-backed stabilio — lack of confidence and low transparency. The tokens that solve this problem by maximum transparency, rigorous auditing and control, creating another problem — excessive centralization and regulation.

Lost the main advantages of crypto-currencies: the lack of Supervisory authority, anonymity, and freedom of translation across borders. Also one of the motives for the development of digital money has always been a distrust of Central banks, their unlimited ability to “print” the currency. This factor in the case of binding of a cryptocurrency to the dollar, for example, is losing its relevance.

Another type stabilio algorithmic assets, the stability of which is ensured by certain methods of balancing prices. An example is the algorithm of the Central Bank when the Issuer creates new assets with the growth of demand and buys these assets as his fall.

These cryptocurrencies do not require collateral and in theory can be easily scaled. In practice, the complexity of such systems will surely limit their adaptation. The possibility of manipulating the algorithm in order its destruction or receipt of speculative income is also of concern.

What’s ahead?

Mass creation of new advanced stabilio will definitely contribute to loss of market share Tether. Similarly, the increasing popularity of stable tokens can take away part of the classic demand of cryptocurrencies by reducing their capitalization.

On the other hand, boom stabilio short term may increase demand for Ethereum, because 60% of the companies use this platform. In General, such tokens still far from perfect. Their use is limited to situations where speculators want to wait out a falling market, or simply do not have other alternatives for trading on the individual exchanges. And in this niche they will certainly remain for a long time.

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