December 30, 2020, 6:30AM EST
• 9 min read

How to build a stablecoin protocol from funding rate arbitrage

Quick Take

  • The well-known stablecoins today are custodial (e.g. USDC), crypto-collateralized (e.g. DAI), and algorithmic (e.g. Empty Set Dollar).
  • Each of these designs trades off the kinds of adversarial conditions they can defend against. For example, a custodial stablecoin like USDC can be subject to regulatory pressures.
  • A stablecoin designed from tokenizing funding rate arbitrage positions can provide an interesting and trust-minimized alternative to current approaches.

Join The Block Research for exclusive research like this

Gain access to this research piece and 100s of others, including ecosystem maps, company profiles, and topics spanning DeFi, CBDCs, banking and markets. Together with additional services, we help organizations understand what’s happening in the rapidly developing digital asset ecosystem.

Already a Research Member? Login Here