The need for better decentralized stablecoins has been emphasized, focusing on three primary challenges: finding a superior index to track beyond the USD, designing a decentralized oracle system resistant to capture, and addressing the competition posed by staking yields. While tracking the USD is currently practical, long-term resilience requires independence from potential USD hyperinflation.
A decentralized oracle system must ensure that the cost of capture exceeds the protocol token market cap, avoiding high user costs. Additionally, the competition from staking yields needs resolution, with potential solutions including reducing staking yields to hobbyist levels, creating a new staking category with high yields but lower slashing risks, or integrating slashable staking with collateral usability. These challenges highlight the complexities in developing stablecoins that are both secure and economically viable.
Call for Improved Decentralized Stablecoins Highlights Key Challenges
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