Quick Take

  • The well-known stablecoins today are custodial (e.g. USDC), crypto-collateralized (e.g. DAI), and algorithmic (e.g. Empty Set Dollar).
  • Each of these designs trades off the kinds of adversarial conditions they can defend against. For example, a custodial stablecoin like USDC can be subject to regulatory pressures.
  • A stablecoin designed from tokenizing funding rate arbitrage positions can provide an interesting and trust-minimized alternative to current approaches.

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