Potentially dangerous stablecoins

☠️ Potentially dangerous stablecoins.☠️

Because of the downtrend in cryptocurrencies and the challenging global environment, people are increasingly thinking about which assets are really safe and which cryptocurrencies are potentially dangerous. Which stablecoins should not be used and why?

There are a total of 2 types of stablecoins by type of management: centralized and decentralized.

1. Centralized Stablecoins.
Concept: in theory, companies that maintain centralized stablecoins hold a reserve of the underlying asset, issue a corresponding number of blockchain-based tokens, and fully manage the viability of the tokens.

Example: USDT, USDC, BUSD, TUSD.

🚫 Disadvantages:
— In practice, there is no dedicated authority to regulate the number of tokens we issue (unregulated printing press).
— Risk of manipulating their reserves and audits to issue unsecured tokens.
— The risk of your funds being cancelled or blocked by the issuer (the company issuing the tokens).
— You do not actually own your funds. 

The obvious disadvantages of centralized stablecoins prompted developers and entrepreneurs to create decentralized stablecoin systems.

2. Decentralized stablecoins.
Concept: by using algorithms to regulate the price, a stable crypto-asset is created without the involvement of fiat currencies and the need for a connection to the traditional financial system, but at the same time the rate of stablecoin corresponds to the stated rate.

Example: DAI, sUSD, USDn.

✅ Pros of decentralized stablecoins:
— Stable crypto-assets without the involvement of fiat currencies and the need for a link to the traditional financial system.
— Decentralization.
— Not subject to a single issuer and regulators.

In short, your funds cannot be controlled by any authorities, and accordingly, you don’t have to worry about blocking, canceling your funds because they are under your control. Use decentralized Stablecoins and be confident about tomorrow!