Stable Coins Analysis: Is there a viable solution for the future?

"Unlike cryptocurrencies such as Bitcoin, which are highly volatile, stable coins provide people with the pragmatic, helpful benefits of a cryptocurrency, without having to worry about distressing price changes since they are grounded in the real world."

A stable coin is designed to have a stable price or value over a period of time less volatile.

Crypto collateralized stable coins are backed by reserves of another cryptocurrency.

Stability is achieved through user incentives to stake Havven tokens as collateral for nUSD.Crypto collateralized stable coins are more decentralized and more liquid than their fiat collateralized counterparts, but again, unlikely to work as a stable, everyday token.

Non-collateralized stable coins aim to closely mimic fiat currencies by not having any asset-backed collateral.

There are a number of stable coins using this concept with the most noteworthy being Basis and Saga.Basis will peg to the US dollar in the short term but eventually aims to peg to a consumer price index as holders use the coin to purchase goods and services.

Saga, on the other hand, will be backed by variable fractional reserves pegged to the International Monetary Fund's SDR.Non-collateralized stable coins will be the most viable option as an "Everyday-token", purely because it mimics the stability mechanisms used by traditional reserve banks with fiat currencies, while still staying completely decentralized and independent.

So stable coins are deemed to be the future of cryptocurrencies and the perfect stable coin will use some variation of non-collateralized tokens.

For truly decentralized stable coins to work, there must also be a system in place that can reliably obtain the exchange rate between the stable coin and the pegged asset, without leaning on third-party institutions that can be manipulated.

If we are to see the displacement of fiat currencies that contain damaging monetary policies, stable coins will be the way to get there.