💹STABLECOINS

STABLECOINS

Cryptocurrencies are notorious for price fluctuations. This chart from CoinDesk Large Cap Index, a composite index comprising single-currency indexes, shows the instability of cryptocurrencies.

Stablecoins, with the promise of better stability, came into existence to address the high volatility in cryptocurrency prices. Stablecoins are designed such that the price is pegged to a fiat money (e.g., USD, EUR), cryptocurrency (e.g., BTC, ETH), or commodities (e.g., precious metals or industrial metals). The popular stablecoins in the market today are UDST, USDC, TUSD, GUSD, etc.

Friddy (USDR), a crypto-backed stablecoin, is designed to have a consistent price or value over time. Friddy is collateralized by a portfolio of major cryptocurrencies (BTC, ETH) and stablecoins (USDT, GUSD). Since Friddy is backed by volatile cryptocurrencies, the market movements will impact Friddy.

To address the volatility challenge and bring stability, we use a combination of over-and-under collateralization of the underlying crypto-assets. In a bear market, the reserves of stable coins will go up. In a bull market, the reserves of non stablecoins will increase.

Based on the underlying portfolio of assets, Friddy coins issued to the market will be +70% of the reserve. Friddy is an anti-inflation coin. The change in price of Friddy will be relative to the annual or monthly inflation of US dollar. Pegging the value to US dollar acts as a perfect hedge against inflation.