KoinlyticsA stablecoin's stability depends on what backs it. Four distinct designs exist, and the market has largely picked winners.
Fiat-collateralized
1 stablecoin backed by 1 dollar in a bank account (or T-bill). Issuer publishes attestations. USDC, USDT, PYUSD, FDUSD all belong here. Market share: ~90% of stablecoin supply.
- Pro: simplest, most trusted, direct redemption.
- Con: centralized issuer, freeze risk, off-chain audit dependence.
Crypto-collateralized (overcollateralized)
Lock 1.5x-2x crypto value to mint stablecoin. DAI, LUSD, GHO are here. If collateral drops, liquidator seizes it.
- Pro: decentralized, transparent on-chain.
- Con: capital inefficient (need $2 to mint $1), volatile collateral risk.
Delta-neutral (synthetic)
Ethena USDe. LST collateral + short perp = delta-neutral position mints stablecoin. Backed by market position, not reserves.
- Pro: capital efficient, high yield via sUSDe.
- Con: CEX counterparty risk, funding dependency, LST peg risk.
Algorithmic (unbacked)
Stability via algorithmic supply expansion / contraction. LUNA/UST was the largest. All major algo-stables have failed.
- Pro: fully decentralized, no collateral required.
- Con: death-spiral dynamic when confidence breaks. Historical mortality rate: ~100%.
Where the market landed
Fiat-collateralized dominates (~90%). Crypto-collateralized survives with ~5%. Delta-neutral is growing (~4%). Algorithmic is functionally dead.
What to check per stablecoin
- What backs it? Read the current attestation.
- Where is redemption possible?
- Who can freeze the token?
- What are the reserves' liquidity?