The stablecoin industry looks quite different today than it did two years ago.
What was once a handful of relatively small projects has evolved into a multi-billion dollar subset of the cryptocurrency that is only continuing to expand–the market caps of many established stablecoins are trending towards growth, and new stablecoin projects are being born all the time.
Additionally, the advent of Facebook’s Libra project has brought quite a bit of new attention–flattering and unflattering–to the stablecoin space; attention that has raised important questions and concerns about the transparency of both the stablecoin ecosystem and the greater cryptocurrency ecosystem as a whole.
Recently, Finance Magnates spoke with Daniel Popa, CEO of Zug-based stablecoin company Anchor, to discuss the mechanics of algorithmic stablecoins and the evolution of the stablecoin industry.
“Anchor is a two-token, algorithmic stablecoin pegged to the sustainable, upward trend of global economic growth,” Popa explained.
What is an algorithmic stablecoin? Let’s back up for a moment: generally speaking, there are three kinds of stablecoins: fiat-pegged (cryptocoins that are ‘pegged’, usually on a one-to-one ratio, to a fiat currency), crypto-pegged (stablecoins that are pegged to other cryptocurrencies), and algorithmic stablecoins (which are stabilized by controlling token supply according to demand.)