{"id":540953,"date":"2023-01-19T18:00:00","date_gmt":"2023-01-19T15:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/"},"modified":"2023-01-19T18:00:00","modified_gmt":"2023-01-19T15:00:00","slug":"6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/","title":{"rendered":"# 6 ways the stablecoin space can improve stability in volatile periods"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a94bcc43f5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a94bcc43f5\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#%E2%80%9D_6_ways_the_stablecoin_space_can_improve_stability_in_volatile_periods_%E2%80%9C\" >&#8221; 6 ways the stablecoin space can improve stability in volatile periods &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Implement_strict_reserve_requirements_for_underlying_assets\" >Implement strict reserve requirements for underlying assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Embrace_radical_transparency\" >Embrace radical transparency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Look_into_crypto_collateralization\" >Look into crypto collateralization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Improve_and_standardize_real-time_price_data_and_reliably_track_reserves\" >Improve and standardize real-time price data and reliably track reserves<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Maintain_reserves_of_known_stable_assets\" >Maintain reserves of known stable assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\/#Pump_the_brakes_on_issuance\" >Pump the brakes on issuance<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_6_ways_the_stablecoin_space_can_improve_stability_in_volatile_periods_%E2%80%9C\"><\/span>&#8221; 6 ways the stablecoin space can improve stability in volatile periods &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjMtMDEvM2MzOGQ1MDEtMjRjMi00ZDIwLTlkN2MtOTZjYmMyMzRlYzRmLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a4050f8>With a value pegged to another currency, stablecoins in theory maintain steady price levels \u2014 hence the name. However, as investors saw in the Terra (LUNA) and UST crashes in May 2022, even stablecoins are subject to diminishing value in times of volatility if underlying pegs are lost or drop in value themselves.<\/p>\n<p>As investors continue to search for reliable instruments in the face of inflation and market uncertainty, enhancing stability in the stablecoin space is an essential effort for attracting continued and new investment. Below, six members of Cointelegraph Innovation Circle discuss practical ways the space can improve stability and reassure investors.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Implement_strict_reserve_requirements_for_underlying_assets\"><\/span>Implement strict reserve requirements for underlying assets<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There\u2019s only one solution: Implement strict reserve requirements for the underlying assets supporting the stablecoin, such as a fixed ratio of reserves to the total supply of stablecoins in circulation. This ensures that there is sufficient backing for the stablecoin, reducing the risk of its value deviating from its peg. This reserve must be available for everyone to audit. \u2013 Erki Koldits,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.popspot.com\/\"> O\u00dc Popspot<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Embrace_radical_transparency\"><\/span>Embrace radical transparency<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The cure for instability and uncertainty is radical transparency. Showing verifiable proof of reserves, undergoing independent audits and keeping your back-end systems open-source (when possible) is the best way to calm fears and stabilize what should always be stable. \u2013 Jae Yang,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.tacen.com\/\"> Tacen<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Look_into_crypto_collateralization\"><\/span>Look into crypto collateralization<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Looking closely into collateralization can come in handy. There are three forms of collateralization in stablecoins: fiat-based, non-collateralized and crypto-collateralized. When these forms are compared, investing in crypto collateralization might be the safest bet. Since these coins are \u201cover-collateralized,\u201d they can account for price fluctuations, leaving excess reserves in case of a significant drop in value. \u2013 Vinita Rathi,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.systango.com\/\"> Systango<\/a><\/p>\n<p class=\"has-black-color has-text-color has-background\" style=\"background-color: #fabf2c;padding: 20px 30px\">Join the community where you can transform the future. Cointelegraph Innovation Circle brings blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> leaders together to connect, collaborate and publish.\u00a0<strong><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/hubs.ly\/Q0152XyT0\">Apply today<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Improve_and_standardize_real-time_price_data_and_reliably_track_reserves\"><\/span>Improve and standardize real-time price data and reliably track reserves<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Stablecoin issuers should improve and standardize real-time price data to keep up with volatile exchange rates while maintaining tamper-proof methods to track reserves. Oracles are capable of collecting, verifying and deploying this information, but their consistency, reliability and security can be uncertain. Optimistic rollup-like mechanisms could play a significant role in this. \u2013 Yaoqi Jia,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/altlayer.io\/\"> AltLayer<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Maintain_reserves_of_known_stable_assets\"><\/span>Maintain reserves of known stable assets<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One thing the stablecoin space can do to improve stability in times of volatility is to maintain a strong backing by reserves of assets that are known to be stable, such as fiat currencies or low-risk securities. This can help to ensure that the stablecoin retains its value even when other cryptocurrencies or financial markets are experiencing volatility. \u2013 Wolfgang R\u00fcckerl,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/entity.global\/\"> ENT Technologies AG<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Pump_the_brakes_on_issuance\"><\/span>Pump the brakes on issuance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>With problems of liquidity leading to insolvency in the ecosystem, stablecoins could try to avert these pitfalls by pumping the brakes on issuance. At the same time, crypto companies should reprioritize over-collateralization to ensure they can meet their community\u2019s expectations. This will ensure that circulating value never eclipses reserves while giving users renewed confidence in holdings. \u2013 Oleksandr Lutskevych,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/cex.io\/\"> CEX.IO<\/a><\/p>\n<hr class=\"wp-block-separator\">\n<p><em>This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.<\/em><\/p>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/hubs.ly\/Q0152XyT0\"><em><strong><u>Learn more about Cointelegraph Innovation Circle and see if you qualify to join.<\/u><\/strong><\/em><\/a><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/innovation-circle\/6-ways-the-stablecoin-space-can-improve-stability-in-volatile-periods\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; 6 ways the stablecoin space can improve stability in volatile periods &#8220; With a value pegged to another currency, stablecoins in theory maintain steady price levels \u2014 hence the name. However, as investors saw in the Terra (LUNA) and UST crashes in May 2022, even stablecoins are subject to diminishing value in times of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":540954,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=1200\/https:\/\/s3.cointelegraph.com\/uploads\/2023-01\/3c38d501-24c2-4d20-9d7c-96cbc234ec4f.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-540953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/540953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=540953"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/540953\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/540954"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=540953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=540953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=540953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}