The development of stablecoin is only a few years. The stablecoin originated from the USDT. issued by Ted Company, formed in Bitfinex 2014 stablecoin is an encrypted currency with stable value. The background of the birth of stablecoin is that the price of encrypted currency fluctuates greatly. As a medium of exchange, it connects the digital currency world with the legal tender field.
Stablecoin is the guarantee that we can make full use of blockchain technology. Any application requires low volatility on the blockchain and no fluctuation of 10–20% currency per day. The application scenarios of stablecoin are those where there is a certain time difference, such as transfer, and betting on market forecasting, gambling and other applications. Stablecoin can ensure price stability to some extent during this period. The characteristics of stablecoins can help investors lock the profits.
In this way, stablecoin has the stability of legal currency and the decentralization of digital currency. So, how does the decentralized stablecoin USDN do it. stablecoin USDN is unsecured / algorithmic. algorithms USDN stablecoins perform active, automated monetary policy (i.e., expanding and shrinking supply to maintain stablecoin prices pegged to $1). These systems can be decentralized, USDN by adjusting the money supply by algorithms to increase or reduce the money supply to stabilize prices and values.
USDN will calculate and adjust the USDN token supply according to the change of the exchange rate of USDN currency (such as the change of the exchange rate against the dollar) through the protocol algorithm. This approach to monetary policy implementation is similar to that used by global central banks today. The blockchain creates and distributes new USDN. if the USDN transaction price is higher than $1.00 These USDN will be automatically issued by smart contracts in the order determined by the agreement; When the USDN transaction price is below $1.00, the blockchain is created and sold through open bidding so that it is no longer in circulation.
