$BTC Unraveling the Stablecoin Industry Chain, is this "stability" really stable?

Unraveling the Stablecoin Industry Chain, is this "stability" really stable?

Dear friends, recently the stablecoin buzz in the financial circle is intense, claiming to have low volatility and stable returns. Is it really that appealing? Today, let's take a closer look at the stablecoin industry chain!

💎 What is a Stablecoin?

Simply put, a stablecoin is a type of cryptocurrency, with the main feature being that it is pegged to fiat currency (like the US dollar) at a fixed ratio, usually 1:1, aiming for value stability, unlike Bitcoin whose price fluctuates wildly. For example, if you spend 1 dollar, you can buy 1 stablecoin, and when you want to use it, you can exchange it back for 1 dollar, theoretically maintaining a constant value.

📈 Upstream of the Industry Chain: The "Secret" of Issuers

The upstream of the stablecoin industry chain consists of issuers. Take the well-known USDT, issued by Tether, which claims that for every USDT issued, there is 1 dollar held in reserve in a bank. However, it has long been questioned regarding the adequacy of its reserves and lack of transparency. Just think about it, if the issuer's reserve assets are inflated, what guarantees the value of the stablecoin? Once trust collapses, the price could plummet instantly.