A Classification Framework for Stablecoin Designs
This work addresses the need for a structured classification framework for stablecoin designs, which is incremental as it organizes existing knowledge rather than introducing new methods.
The paper tackles the problem of understanding stablecoin designs by systematically decomposing existing stablecoins into component elements, exploring their strengths and drawbacks, and identifying future directions, without providing specific numerical results.
Stablecoins promise to bridge fiat currencies with the world of cryptocurrencies. They provide a way for users to take advantage of the benefits of digital currencies, such as ability to transfer assets over the internet, provide assurance on minting schedules and scarcity, and enable new asset classes, while also partially mitigating their volatility risks. In this paper, we systematically discuss general design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions.