Crypto-backed Stablecoin
A digital asset backed by other digital assets, often overcollateralized to ensure stability.
What is Crypto-backed Stablecoin?
Crypto-backed stablecoins, like Dai (DAI) issued by MakerDAO, are digital assets pegged to a fiat currency (e.g., USD) but backed by other digital assets, such as ETH, rather than fiat reserves. To counter the volatility of underlying assets, these stablecoins use overcollateralization, where the value of collateral exceeds the stablecoin’s pegged value. Managed by smart contracts, they offer decentralized stability, making them popular in DeFi for lending, borrowing, and liquidity provision, though they carry risks from collateral price fluctuations.
Related Terms
Hard Fork of a Blockchain
A permanent split in a blockchain’s history, creating two separate chains due to incompatible consensus rule changes.
Rollup Validity Proof
A security mechanism for Layer 2 solutions that verifies batched transactions off-chain using cryptographic proofs submitted to the main blockchain.
Sell Side
The portion of the order book listing aggregated sell orders at various price levels.
S2F (Stock-to-Flow)
A model that measures Bitcoin's scarcity by comparing its existing supply (stock) to its annual issuance rate (flow), often used to predict price trends.
Sell Walls
Large accumulations of sell orders at a specific price level, forming a barrier against upward price movement.
Solana Token Program
A core Solana onchain program with the program ID `TokenkegQfeZyiNwAJbNbGKPFXCWuBvf9Ss623VQ5DA`, enabling the creation, transfer, minting, and freezing of fungible and non-fungible digital assets.