What is Stablecoin?: A Survey on Its Mechanism and Potential as Decentralized Payment Systems

Understand

Our study provides a survey on how existing stablecoins-- cryptocurrencies aiming at price stabilization-- peg their value to other assets, from the perspective of Decentralized Payment Systems (DPSs).

• This attempt is important because there has been no preceding surveys focusing on the stablecoin as DPSs, i.e., the one aiming at not only price stabilization but also decentralization.
• Specifically, we first classified existing stablecoins into four types according to their collaterals (fiat, commodity, crypto, and non-collateralized) and pointed out the high potential of non-collateralized stablecoins as DPSs; then, we further classified existing non-collateralized stablecoins into two types according to their intervention layers (protocol, application) and confirmed details of their representative mechanisms.
• Utilizing concepts such as Quantity Theory of Money (QTM), Tobin tax, and speculative attack, our survey revealed the status quo where, despite the high potential of non-collateralized stablecoins, they have no standard mechanism to achieve the stablecoin for practical DPSs.