Introduction to USDE cryptocurrency
USDE is a stablecoin, belonging to the category of cryptocurrencies. The characteristic of stablecoins is that their value is pegged to an on-chain asset (like the US dollar) to maintain stability through various mechanisms.
Key features of stablecoins:
- Anchor mechanism: Stablecoins maintain their value stability by anchoring to an on-chain asset (like the US dollar).
- Collateral mechanism: Stablecoins can maintain their value stability through collateralizing on-chain assets.
- Algorithmic adjustment: Some stablecoins adjust the supply-demand relationship through algorithms to maintain their value stability.
Types of stablecoins:
- Centralized stablecoins: Typically collateralized by fiat currencies, stored in off-chain bank accounts, acting as reserve funds for on-chain tokens.
- Decentralized stablecoins: Not controlled by any party, where anyone can audit the protocol's collateralization rate on-chain.
- Central Bank Digital Currency (CBDC): Issued by central banks, serving as government-approved legal tender for high-value retail and wholesale bank payments.
Operating mechanism of stablecoins:
- Collateralized debt position: Users lock collateral in smart contracts, generating stablecoins as overcollateralized debt.
- Arbitrage and Elastic Supply: To maintain the stability of the stable coin's value by adjusting interest rates and supply through algorithms.
In short, USDE as a stable coin is characterized by maintaining its value stability through anchoring and collateral mechanisms, making it a special type in the cryptocurrency market.
