Analysis of the Current Development Status of Decentralized Stablecoins

The current stablecoin market is mainly dominated by centralized stablecoins, with USDT, USDC, and BUSD accounting for 91.6% of the market share. Decentralized stablecoins are still in the early stages of development, with a small market share, but they have inherent demand and growth potential.

The Necessity of Decentralized Stablecoins

1. Create independent credit and coinage rights, not controlled by centralized institutions.
2. Avoid centralization risks, such as regulatory intervention, asset freezing, etc.
3. Meet the demand for Decentralization assets

Mainstream Decentralization Stablecoin Mechanisms

1. Over-collateralization: such as DAI, LUSD
2. Algorithm stability: For example, UST( has collapsed ), FRAX
3. Custom Index: such as RAI

Current Major Decentralization Stablecoin Projects

1. Liquity (LUSD):
   • Use only ETH as collateral
   • Automatic Liquidity Pool Design
   • Lack of liquidity incentive mechanism

2. Inverse Finance (DOLA):
   • Use ETH and OETH as collateral
   • Design DBR token to adjust interest rates
   • The borrowing interest rate is relatively high ( 4.92% )

3. RAI:
   • Custom index as anchor price
   • Use redemption rate to control supply
   • Lack of sufficient economies of scale

Development Challenges

1. Insufficient scale effects, making it difficult to compete with centralized stablecoins.
2. Price stability is poor
3. Low capital efficiency
4. Insufficient liquidity

Future Outlook

1. With the development of DeFi, the demand for decentralized stablecoins will increase.
2. Need to seek a balance between Decentralization, security, and efficiency
3. Innovative mechanism design to improve capital efficiency and stability
4. Strengthen the integration with the DeFi ecosystem

The decentralized stablecoin sector is still in its early stages and has significant growth potential in the future. With continuous innovation in technology and mechanisms, it is expected that more competitive projects will emerge.