Timvi

The cryptocurrency market is extremely volatile, that is why there is a high
demand for stable assets. Today, we already know of multiple “stable coins”
that are tied to the price of fiat currencies (e.g. USD, EUR) or commodities
(e.g. gold, oil). According to coinmarketcap.com, the daily average volume
of stablecoins is comparable to that of Bitcoin, and even exceeds it on some
days.

To guarantee the consistency of collaterals, its accounts are regularly being
audited. Unfortunately, in this case, only the “word of honor” of the auditor
company can guarantee the availability of cryptocurrency resources.
In the near foreseeable future, the situation will not change. The human factor
cannot remain almost the only factor affecting the price of stablecoins. In
order to change something, the cryptocurrency market needs a different
solution. For instance, a software solution that excludes any intermediaries.
The drawbacks of this type of stable coins are clearly illustrated by the graphs
of their market capitalization: the drops coincide with the report periods. In
fact, stable coins are a centralized instrument that can be either created or
destroyed anytime by the will of a third party.

Among the ways of eliminating the issues of centralization and the trust
model are stable collateral coins that have the following distinctive features:
• every token is over-collateralized by other crypto asset;
• token emission is only possible through backed smart contract;
• every participant can check the collateralization of any token;
• stability is guaranteed by the system algorithm.