Quote from: Jackl87 on May 08, 2022, 09:28:27 PM

Quote from: Xal0lex on April 28, 2022, 07:36:15 PM

Stablecoins like UST, USN, USDD have a very tricky link to the dollar and the collateral pool, in the form of a native token of a particular blockchain, be it LUNA, NEAR, TRON, etc. Such projects offer or are about to offer 20-30% per annum in staking these stablecoins. Not a bad interest rate, is it? But will these projects be able to provide such a high interest rate all the time, and won't that provoke a cascading collapse of both the stablecoins, with the loss of the peg and a cascading collapse of the native tokens that act as reserve collateral?
After all, such high payouts to stakers must be accompanied by constant replenishment of these projects reserve funds. But what will happen if the money stops flowing in the right amount?

After the pump of Waves to over 50$ a few weeks ago i sold my waves (i did only have a few sadly) and now i have some USDN sitting in my waves wallet that are doing nothing. My first plan was to trade those USDN into USDC or USDT and then put those into the algorithmic trading pools of the waves wallet, but i could not do that because Waves was crashing very hard after that pump and even took USDN with it to a price of around 0,70 USD which was pretty crazy as USDN should be a stable coin after all. This pretty much has made me lose some trust into the whole waves platform and i am not so sure anymore if i should really invest my stablecoins there.

This is exactly the weakness of these algorithmic stabelcoins. They are very dependent on their native coins. The more complex all these collateral schemes are, the more fragile the stabelcoin becomes. As soon as native blockchain tokens start to lose a lot of value, the stabelcoin's link to the dollar disappears and it is no longer a stabelcoin, but a rapidly declining altcoin, which can sometimes lose 20-30% of its value.