Stablecoins

A stable coin is a type of crypto currency whose "buying power" (or value) doesn't change much. It is less volatile as compared to other crypto like Bitcoin, Ether, Polygon etc.

Different Types of Stable coins

1. Pegged stable coin: pegged to a more stable asset like US Dollar

2. Floating stable coin: use an algorithm to maintain a constant buying power

3. Governed stable coin: kinda centralized as minted/burned by a governing body. ex: USDC , DAI

4. Algorithmic stable coin: algorithm maintains stability without any human intervention. ex:DAI, FRX, RAI, UST

In context of stablecoins, collateral is an asset that is backing that stable coin. In case if stablecoin fails and the collateral also fails, then it is called as Endogenous collateral.

In case of endogenous collateral, the collateral is created specifically by the protocol to serve as a collateral and it can be that protocol owns the issue of underlying collateral.

Example of Endogenous collateral: USDC[USD], DAI[ETH]

In case failure of stablecoin doesn't automatically lead to failure of collateral, that is an Exogenous collateral. Exogenous collateral originates outside the protocol.

Example of Exogenous collateral: UST[Luna]

In this project we'll be developing a stablecoin with the following properties:

1. Relative Stability: Pegged or Anchored to USD
2. Stability Mechanism: Algorithmic(Decentralized)
   1. People can only mint the stablecoin with enough collateral(coded in smart contract)
3. Collateral: Exogenous(Crypto)
   1. wETH - ERC20 version of ETH
   2. wBTC - ERC20 version of BTC