One thing I haven't really wrapped my head around is the whole stablecoin thing. I don't understand why anyone would want to own those things. The whole point of cryptos in my opinion is investing in a disruptive, decentralized concept/technology that has a novel use and better investment case than traditional fiat-based currencies that are tied to rocks dug out of the ground. Why would I want to take my fiat and transfer it to an exchange only to buy a stablecoin that tracks with a fiat currency? It sounds fucking ridiculous... I just don't understand this concept at all and I'm being dead serious. So someone please enlighten me.
The stablecoin space has evolved from a single fiat backed stablecoin into this huge sector with tons of variation and experimentation. It's way too deep and complex to dive into all of it but here's a summary based on my experience.
Fiat collateralized, fully collateralized, fiat pegged, centralized (USDT, USDC, BUSC, and more): Stablecoins are attractive because it turns fiat into a crypto-native asset and allows for low friction crypto<->crypto markets. In addition to that it's required in places like Ethereum where dollars must be wrapped in an ERC-20 token if they want to live on the network and be used in DeFi.
Crypto collateralized, over/fully collateralized, fiat pegged, semi decentralized (SAI, DAI, sUSD): This takes the above tokens and improves on them by decentralizing the token and diversifying the collateral.
Partially/non-collateralized, fiat/non-fiat pegged, fully decentralized (FEI, FRAX, AMPL, ESD, and more): This space is the most nascent and has the most experimentation and innovation happening. The golden standard stablecoin is one that is fully decentralized, trustless, partially or fully collateralized by assets that themselves are fully decentralized, and can be pegged to any asset or basket of assets. I don't think we're there yet but I also wouldn't bet against the geniuses working on this stuff.
Sometimes too much thinking is not good for ones wallet.
