Stablecoin 101

Fiat Based 💱	Collateralized 💵	Algorithmic 🤖
USDC, BUSD, USDT*	DAI, MIM, MAI	UST, USDN, USN, FRAX
collateralized by purely USD	collateralized with crypto assets	non-collateralized, relay of ‘backed’ crypto token
user sends USD to token issuer's bank account issuer creates an equivalent amount of stablecoin via smart contract newly minted USDC are delivered to the user, while the substituted US dollars are held in reserve	deposit accepted crypto as collateral mint corresponding amount of new DAI via smart contract pay back the borrowed DAI to get back locked collateral incentive-based mechanism to sell $1 cost DAI at >$1 & mint discounted DAI when <$1	Above $1 (contracts LUNA supply): users burn $1 worth of LUNA to mint 1 UST, sell in market for profit Below $1 (contracts UST supply): users burn 1 UST to redeem $1 worth of LUNA, sell in market for profit
Centralized	Decentralized	Decentralized
The most stable	Relatively stable	The most fluctuating
Low risk	Medium risk	High risk
Taking the stable advantage to bridge 1:1 real world fiat into crypto space, but somehow involve	Issuance doesn’t rely on any intermediary, favored by people who pursue decentralized & ownership	Kind of experimental projects, attract adoption with high interest (APY), but mostly not sustainable