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Stablecoins can be issued by either a central authority or a decentralized autonomous institution (DAO). Tether is a central institution that issues new coins based on the guarantee offered, allowing more coins to enter circulation if the reserve increases. DAO will always allow additional transparency if working in decentralized mode.
Tether is the best known "stablecoin" currency being 100% supported by FIAT monetary assets in a reserve account. The conversion rate of stablecoin Tether is fixed (USDT) and is equivalent to 1 USD. Tether is a centralized "stablecoin" and has recently been accused of manipulating the market and refusing to accept external auditors.
Stabilized cryptocurrencies are issued as collateral, which is conceptually similar to coins stabilized with Fiat currency. Despite this, the significant difference between the two projects is that, while fiat collateralization usually happens in the blockchain, the crypto-asset used to support this type of acquisition is done on the blockchain, using smartcontracts in a decentralized way. . In most cases, they work by allowing users to take out a loan against a smartcontract by closing collateral, which requires efficiency to pay off its debt if stablecoin decreases in value. To prevent sudden collapses, a user who takes out a loan can be liquidated by smartcontract if their collateral falls too close to the withdrawal amount.
Important features of stablecoin coins:
-The value of stabilecoin is influenced by another cryptocurrency or a cryptocurrency portfolio;
-The operation is performed online through smart-contracts;
-The supply of stablecoins is regulated by chain, using smartcontracts;
-Price stability is achieved by introducing additional tools and incentives, not just collateral.
