Managed Stablecoin

Definition

A stablecoin is a type of “Real World Asset” (RWA). It is represented on-chain as a cryptocurrency that is pegged to a stable asset, like fiat currency (e.g., USD), commodities (e.g., gold), or other financial instruments. Its main goal is to maintain a steady value, unlike the typical volatility seen in the cryptocurrency market. In essence, one USD-pegged stablecoin (e.g., USDC) should always be equivalent to one USD.

Example

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Types of stablecoins

  • Fiat-collateralized: The entity behind the stablecoin maintains a reserve of the asset(s) backing the stablecoin (e.g., USDC).
  • Crypto-collateralized: Backed by a basket of other cryptocurrencies (e.g., DAI).
  • Algorithmic: Uses software algorithms to automatically adjust the supply based on demand, aiming to maintain a stable price.

Why is Aptos preferable for RWAs like stablecoins?

Building native stablecoins on Aptos is beneficial due to several reasons:

  • Upgradeability: On Aptos, upgradeability is straightforward and doesn’t require proxy patterns (like in EVM). This is crucial for adapting stablecoin mechanisms to meet regulatory and market demands.
  • Resource-oriented model: Aptos employs a resource-oriented model, making it efficient to manage stablecoins as unique assets with traceable ownership and lifecycle management on-chain.
  • High throughput and low latency: Aptos' capabilities facilitate seamless integration with DeFi applications and enable efficient cross-border payments, crucial with popular assets like the United States Dollar.
  • Built-in safety features: The safety features of Move smart contracts on Aptos help ensure that stablecoin implementations comply with regulatory standards, establishing user trust and security.