How does basis cash differ from other stablecoins like Tether or USD Coin?

4 answers

• Jan 13, 2022 · 3 years ago
  Basis cash, Tether, and USD Coin are all stablecoins, but they have different mechanisms to maintain their stability. Tether and USD Coin are both fiat-collateralized stablecoins, meaning they are backed by reserves of traditional currencies like USD. On the other hand, basis cash is an algorithmic stablecoin that uses a combination of algorithms and market forces to maintain its peg to a target value, typically the US dollar. This means that basis cash does not rely on traditional reserves and is not directly tied to any specific fiat currency.
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• Jan 13, 2022 · 3 years ago
  When it comes to stability, basis cash and Tether/USD Coin also differ in terms of their price stability mechanisms. Tether and USD Coin aim to maintain a 1:1 peg with the underlying fiat currency, which means their prices should not deviate significantly from the target value. In contrast, basis cash uses a dynamic supply adjustment mechanism to stabilize its price. When the price of basis cash is above the target value, the supply of basis cash tokens increases, and when the price is below the target value, the supply decreases. This mechanism helps to keep the price of basis cash closer to its target value.
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• Jan 13, 2022 · 3 years ago
  As for the issuers, Tether and USD Coin are both issued by centralized entities, while basis cash is typically issued in a decentralized manner. This means that the control and management of Tether and USD Coin are in the hands of a centralized authority, which can introduce counterparty risk. On the other hand, basis cash is governed by a decentralized protocol and is not subject to the same counterparty risk. However, it's worth noting that basis cash is still relatively new and may have its own risks and challenges.
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• Jan 13, 2022 · 3 years ago
  In summary, basis cash differs from other stablecoins like Tether or USD Coin in terms of its mechanism for maintaining stability, its price stabilization mechanism, and its issuer structure. While Tether and USD Coin are fiat-collateralized stablecoins issued by centralized entities, basis cash is an algorithmic stablecoin that uses algorithms and market forces to maintain its peg. The price of basis cash is stabilized through a dynamic supply adjustment mechanism, and it is typically issued in a decentralized manner. Each stablecoin has its own advantages and considerations, and it's important for users to understand these differences before deciding which stablecoin to use.
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