Skip to main content
SpringerLink
Log in

SoK: A Classification Framework for Stablecoin Designs

  • Conference paper
  • First Online:
Financial Cryptography and Data Security (FC 2020)

Part of the book series: Lecture Notes in Computer Science ((LNSC,volume 12059))

Included in the following conference series:

Abstract

Stablecoins promise to bridge fiat currencies with the world of cryptocurrencies. They provide a way for users to take advantage of the benefits of digital currencies, such as ability to transfer assets over the internet, credibly commit to minting schedules, and enable new asset classes, while also partially mitigating their volatility risks. In this paper, we systematically discuss general design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Examples include TrueUSD  [68], USDC  [20], USDX  [54], USDVault  [70], A-Eurs  [60], and many others.

  2. 2.

    This is one of the reasons the US went off of the gold standard.

  3. 3.

    USDVault for example is pegged to USD but collateralized with gold.

  4. 4.

    There has thus far been no regulatory precedent establishing how much protection end users of stablecoins receive from deposit insurance.

  5. 5.

    Note that USD is not collateralized, and yet it remains stable. However, when the dollar was a fledgling currency it was backed by gold. It was only after extensive global adoption that the backing was gradually eased-off. Additionally, the US government has the infrastructure to support this type of regime. US federal law makes it so that businesses are required to accept US issued currency as legal tender. There are also regulatory and executive agencies that enforce compliance.

  6. 6.

    Note that the user does not necessarily have to redeem the Tether themselves for this reasoning to hold-it is enough to believe that they can sell it to someone else for more than what they paid for it.

  7. 7.

    Saga prices are quoted in terms of SDR, but users can buy using fiat such as USD.

References

  1. Basis: A stable, algorithmic cryptocurrency protocol (2018). https://www.basis.io

  2. Al-Naji, N., Chen, J., Diao, L.: Basis: a price-stable cryptocurrency with an algorithmic central bank (2017). https://www.basis.io/basis_whitepaper_en.pdf

  3. Alchemint: Alchemint (2018). https://tinyurl.com/yy4vbn7o

  4. Ancheta, A.: For a few dollars less: Kowala stablecoin backed by math and code (2018). https://cryptobriefing.com/for-a-few-dollars-less-kowala-stablecoin-backed-by-math-and-code/

  5. Anchored by the global economy (2019). https://theanchor.io/

  6. Augment: Stable cryptocurrencies as a medium of exchange (2017). https://bit.ly/2LhMeXm

  7. https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf

  8. Barghuthi, Y., Mezrin, V.: Jibrel network (2018). https://github.com/jibrelnetwork/

  9. Biggs, J.: https://www.coindesk.com/synthetix-trader-rolls-back-broken-trades-that-netted-1-billion-profit

  10. Bitbay: Bitbay: Decentralized peg (David Zimbeck). https://bitbay.market/downloads/whitepapers/bitbay-dynamic-peg.pdf?utm_source=medium&utm_medium=blog&utm_campaign=dynamic-peg-whitepaper

  11. Bitcoin.com: Mongolian central bank authorizes a digital coin (2018). https://news.bitcoin.com/new-stablecoins-from-cryptopound-and-metal-backed-swiss-coin-to-mongolian-candy/

  12. Price-stable cryptocurrencies. https://bitshares.org/technology/price-stable-cryptocurrencies/

  13. Brent, T., et al.: Reserve stabilization protocol (2019). https://reserve.org/whitepaper.pdf

  14. Brooks, S., Jurisevic, A., Spain, M., Warwick, K.: Havven: a decentralised payment network and stablecoin (2018). https://www.synthetix.io/uploads/havvenwhitepaper.pdf

  15. Brooks, S., Jurisevic, A., Spain, M., Warwick, K.: Havven: a decentralised payment network and stablecoin (2018). https://www.synthetix.io/uploads/havven_whitepaper.pdf

  16. Buterin, V.: Schellingcoin: a minimal-trust universal data feed. https://blog.ethereum.org/2014/03/28/schellingcoin-a-minimal-trust-universal-data-feed/

  17. Carats.io: Whitepaper (2018). https://www.carats.io/whitepaper.pdf

  18. Carbon money. https://www.carbon.money/

  19. Cascarilla, C.: Paxos standard (2018). https://account.paxos.com/whitepaper.pdf

  20. Centre: Centre whitepaper (2018). https://www.centre.io/pdfs/centre-whitepaper.pdf

  21. https://cointelegraph.com/news/coinmarketcap-removes-south-korea-exchanges-ripple-market-cap-drops-20-billion

  22. https://coinmarketcap.com/

  23. Company, G.T.: The Gemini dollar: a regulated stable value coin. https://bit.ly/2oVLfkI

  24. Eisele, S.: The white company launches ‘white standard’ \$usd-backed stablecoin, bringing long-awaited liquidity, transparency, and stability to cryptocurrency holders (2018). https://tinyurl.com/y3ngachk

  25. English, J.: Bridging the gap to a stable token (2018). https://blog.sweetbridge.com/bridging-the-gap-to-a-stable-token-c4fdbd70e9c3

  26. EOSDT: Technical specification (2019). https://eosdt.com/specification

  27. Eufemio, A., Chng, K., Djie, S.: Digix’s whitepaper (2016). https://digix.global/whitepaper.pdf

  28. Epay USD: A compliant, stable value currency (2019). https://www.epay.com/en/eusd_white_paper_en.pdf

  29. Findlay, S.W.: Q&A introduction to AAA reserve currency (2017). https://medium.com/arc-blog/q-a-introduction-to-arc-reserve-currency-in-1-000-words-49bea91c22eb

  30. Finlay, D.: Phi: Decentralized lending and stable currency might not actually be stable (2016), https://medium.com/@danfinlay/phi-decentralized-lending-and-stable-currency-might-not-actually-be-stable-36f472948591

  31. Foundation, H.: Technical whitepaper (2017). https://static.coinpaprika.com/storage/cdn/whitepapers/763.pdf

  32. Georgen, C.: Topl: empowering growth by enabling investment (2017). https://tinyurl.com/y4suph2r

  33. Globcoin: https://globcoin.io/howitworks.html

  34. Hertzog, E., Benartzi, G., Benartzi, G.: Bancor protocol (2018). https://storage.googleapis.com/website-bancor/2018/04/01ba8253-bancor_protocol_whitepaper_en.pdf

  35. Triennial Central Bank Survey: Foreign exchange turnover in April 2016. https://www.bis.org/publ/rpfx16fx.pdf

  36. Hoang, K., Zhang, D., Diwan, A., Guy, B.: Stably: transparent reserve-backed stablecoins for multiple blockchain protocols (2018). https://www.stably.io/static/whitepaper.pdf

  37. J.P. Morgan creates digital coin for payments (2019). https://www.jpmorgan.com/global/news/digital-coin-payments

  38. Kamvar, S., Olszewski, M., Reinsberg, R.: Celo: a multi-asset cryptographic protocol for decentralized social payments. https://bit.ly/2HyGvLK

  39. Kereiakes, E., Kwon, D., Maggio, M.D., Platias, N.: Terra money: stability and adoption (2019). https://s3.ap-northeast-2.amazonaws.com/terra.money.home/static/Terra_White_paper.pdf?201904

  40. Kim, R., Choi, B.: Xank: a treasury-backed stability-guaranteed cryptocurrency (2018). http://paper.xank.io

  41. Kuo, E., Iles, B., Cruz, M.R.: Ampleforth - a new synthetic commodity (2019). https://www.ampleforth.org/paper/

  42. Labs, A.: Aurora: a decentralized financial institution utilizing distributed computing and the ethereum network (2019). https://auroradao.com/whitepaper/Aurora-Labs-Whitepaper-V0.9.7.pdf

  43. Lebed, A.: Stableunit: a low-volatility p2p electronic cash system (2018). https://stableunit.org/StableUnit-whitepaper.pdf

  44. Lee, J.: Nu (2014). https://nubits.com/NuWhitepaper.pdf

  45. Libra white paper (2019). https://libra.org/en-US/white-paper/#introducing-libra

  46. Maker: The dai stablecoin system (2017). https://bit.ly/2DwX21S

  47. Mita, M., Ito, K., Ohsawa, S., Tanaka, H.: What is stablecoin?: A survey on price stabilization mechanisms for decentralized payment systems. https://arxiv.org/abs/1906.06037

  48. https://mkr.tools/system/feeds

  49. https://finance.yahoo.com/news/makerdao-governance-risk-call-march-191947369.html

  50. Neetzel, D., Konopka, R., Jeger, F., Trobe, B.L., Heyden, H.: Instant, feeless and green p2p value transfer with fiat stablecoins (2018). https://docsend.com/view/k9hyw3f

  51. Neutral: FAQ (2019). https://blog.neutralproject.com/posts/2019/05/14/what-is-neutral.html

  52. OneGram: Whitepaper (2018). https://onegram.org/whitepaper

  53. Pernice, I.G., Henningsen, S., Proskalovich, R., Florian, M., Elendner, H., Scheuermann, B.: Monetary stabilization in cryptocurrencies - design approaches and open questions. In: Crypto Valley Conference on Blockchain Technology (CVCBT) (2019)

    Google Scholar 

  54. Peshkov, A., Sapunov, E., Zhuravlenko, D.: Usdx whitepaper (2018). https://drive.google.com/file/d/10Ph2AhPHDXsgqXwD1CglRFTVCvxW0SSC/view

  55. Qureshi, H.: Stablecoins: designing a price-stable cryptocurrency (2018). https://hackernoon.com/stablecoins-designing-a-price-stable-cryptocurrency-6bf24e2689e5

  56. https://www.blockchain.com/ru/static/pdf/StablecoinsReportFinal.pdf

  57. https://bit.ly/2v9pZuM

  58. Rockz: Whitepaper. https://s3.eu-central-1.amazonaws.com/alprockz-docs/RockzWhitePaperEnglish_v7.pdf

  59. Saga: Saga. https://www.saga.org/static/files/saga-whitepaper.pdf

  60. Stasis: Eurs (2019). https://eurs.stasis.net/

  61. Staticoin: Whitepaper (2017). http://staticoin.com/whitepaper/

  62. Steem: An incentivized, blockchain-based, public content platform (2018). https://steem.com/steem-whitepaper.pdf

  63. Stronghold: Stronghold. https://docsend.com/view/gg3p9ce

  64. Stuart Hoegner Affidavit 4–30

    Google Scholar 

  65. https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf

  66. Titus, J.: From many, Unum (2017). https://medium.com/unum/from-many-unum-8c8493a8db9d

  67. Stablecoin for instant payments and for use on exchanges|token (2019). https://token.io/x-consumers

  68. TrustToken: Trusttoken - trueusd. https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf

  69. Valfells, S.: Why Monerium e-money is unlike Facebook’s Libra cryptocurrency (2019). https://monerium.com/monerium/2019/08/12/why-monerium-e-money-is-unlike-facebook-libra-cryptocurrency.html

  70. Vault: USDVault stablecoin. http://vault.ch/usdvault-stablecoin-gold-standard/

  71. https://tether.to/tether-update/

  72. X8Currency: Faq (2018). https://www.x8currency.com/faq/

Download references

Author information

Authors and Affiliations

  1. Cornell University, Ithaca, NY, 14853, USA

    Amani Moin, Kevin Sekniqi & Emin Gun Sirer

  2. AVA Labs, Brooklyn, NY, 11232, USA

    Amani Moin, Kevin Sekniqi & Emin Gun Sirer

Authors
  1. Amani Moin
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kevin Sekniqi
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Emin Gun Sirer
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Amani Moin .

Editor information

Editors and Affiliations

  1. New York University, New York City, NY, USA

    Joseph Bonneau

  2. University of California, La Jolla, CA, USA

    Nadia Heninger

Appendices

9 Appendix A: Illustration of Stablecoin Mechanisms

(See Figs. 4, 5, 6 and 7).

Fig. 4.
figure 4

Reserve of Pegged Asset (ex. USDC)

Full size image
Fig. 5.
figure 5

Algorithmic (ex. Saga)

Full size image
Fig. 6.
figure 6

Dual Coin (ex. Basis)

Full size image
Fig. 7.
figure 7

Leveraged Loans (ex. Dai)

Full size image

Appendix B: Classification of Existing Stablecoins

Name

Peg

Collateral

Collateral Amount

Price & Supply Adjustments

Price Information

Carbon

USD

USD

Full

Reserve of pegged asset

Trades

Tether  [65]

USD

USD/Euro

Partial

Reserve of pegged asset

Trades

TrueUSD  [68]

USD

USD

Full

Reserve of pegged asset

Trades

Basis

USD

None

None

Two coin

Oracle

BitUSD  [12]

USD

BTS

Full or over

leveraged loans

Elected delegates input exchange prices

Saga  [59]

initially SDR, later CPI or none

Basket of Fiat (SDR)

Full to partial

Algorithmic market maker

Based on amount of reserve

Bancor  [34]

ETH

ETH

Over

Algorithmic market maker

Based on token balances

Dai  [46]

USD

ETH

Over

Leveraged loans

Median oracle

Gemini Dollar  [23]

USD

USD

Full

Reserve of pegged asset

Trades

USDC  [20]

USD

USD

Full

Reserve of pegged asset

Trades

AAA Reserve  [29]

Avg inflation for G-10 countries

Fiat, fixed income, and loan investments

Full

Determined by by Arc Fiduciary Ltd

Trades and oracle

DGX  [27]

Gold

Gold

Full

Reserve of pegged asset

Trades

EURS  [60]

Euro

Euro

Full

Reserve of pegged asset

Trades

StableUSD/ Stably/ USDS  [36]

USD

USD

Full

Reserve of pegged asset

Trades

PAX  [19]

USD

USD

Full

Reserve of pegged asset

Trades

White standard  [24]

USD

USD

Full

Reserve of pegged asset

Trades

SDUSD  [3]

USD

NEO

Over

Leveraged loans

External oracle elected by SDS holders

JPM Coin  [37]

USD

USD

Full

Reserve of pegged asset

Trades

USDX  [54]

USD

Lighthouse (LHT)

200%+

Dual coin variant

Median of exchange prices, validated by users

Stronghold USD  [63]

USD

USD

Full

Reserve of pegged asset

Trades

sUSD  [14]

USD

Synthetix (SNX)

5x

Leveraged loans

External oracle

eUSD (Havven)  [15]

USD

ETH

Over

Leveraged loans

External oracle

eUSD by Epay  [28]

USD

USD

Full

Reserve of pegged asset

Trades

NuBits  [44]

USD

None

None

Nushareholders vote whether to list more NuBits on an exchange, or offer interest to take NuBits out of circulation

Voting

Token  [67]

USD

USD

Full

Reserve of pegged asset

Trades

Monerium  [69]

One for each major currency

Same as peg

Full

Reserve of pegged asset

Trades

Reserve  [13]

initially USD

initially USD, later other assets

Initially full

Reserve of pegged asset

Trades

Terra  [39]

SDR

None

None

Dual coin

Randomly sample users who vote on price

Ampleforth  [41]

USD

None

None

Supply is expanded or contracted proportional to market cap

Whitelist of trusted oracles

Augmint  [6]

Euro

ETH

2x

Leveraged loans

Exchanges

Bridgecoin  [25]

USD

ETH

2x

Leveraged loans +algorithmic market maker

Oracle

HelloGold  [31]

Gold

Gold

Full

Reserve of pegged asset

Trades

Kowala  [4]

USD

None

None

Block rewards increase when price is high and are burned when price is low

Large holders of mUSD(staking token) act as oracles

x8c  [72]

None

Gold, USD, Euro, GBP, JPY, AUD, CAD, NZD, CHF

Full

AI shifts funds across currencies to keep value constant

External oracle

NOS  [50]

USD

USD

Full

Reserve of pegged asset

Trades

Phi  [30]

USD

TBD

Over

Phi is minted when validators issue a loan and burned when the loan is paid back

TBD

Celo  [38]

USD

Celo Gold, BTC, ETH

Variable

Dual coin + algorithmic central bank

Crowd oracle

Aurora Boreal  [42]

USD

ETH and other reserves

Partial

Supply expands when Decentralized Capital issues loans denominated in Boreal and contracts when loans are repaid, users will also receive grants to act as market makers

Unknown

Stableunit  [43]

USD

Cryptoassets

Initially over

Algorithmic market maker

Median oracle

Rockz  [58]

CHF

CHF

Full

Reserve of pegged asset

Trades

Steem Dollars  [62]

USD

None

None

Interest accrues to Steem Dollar holders

Steem Power holders elect oracles

USDVault  [70]

USD

Gold

Full

Reserve of pegged asset, “sophisticated gold hedging process” to maintain peg

Trades

Globcoin.io  [33]

Gold and currency basket

Gold and 15 largest currencies

Full

Reserve of pegged assets, can cash out to any one currency in basket

Oracle

JCash  [8]

USD, KRW and other assets

USD, KRW and other assets

Full

Reserve of Pegged asset

Trades

Staticoin  [61]

USD

Eth

Full

Dual coin variant

24h exchange price

Unum  [66]

USD

Cryptoassets

Under to over depending on prices

Algorithmic market maker: users sell crypto or Unum to smart contract

External oracle

Poly  [32]

None

Tokenized commodities

Full

Reserve of pegged asset

Trades

BitBay  [10]

None

None

None

Freeze and unfreeze tokens based on transaction and staking history. Users receive interest on frozen coins

Dynamic Peg oracle

BitCNY  [12]

Chinese Yuan

BTS

Full or over

leveraged loans

Elected delegates input exchange prices

EOSDT  [26]

USD

EOS

Over

Leveraged loans

Oracle

Neutral  [51]

USD

Other stablecoins (PAX, TUSD, DAI, and USDC)

Full

Reserve of pegged asset

Trades

Candy  [11]

Mongolian Tugrik

Mongolian Tugrik

Full

Reserve of pegged asset

Trades

Onegram  [52]

Gold

Gold

Full

Reserve of pegged asset

Trades

Carats.io  [17]

Diamonds

Diamonds

Full

Reserve of pegged asset

Trades

Libra  [45]

Collateral basket

Bank deposits and short-term government securities

Full

Reserve of pegged asset

Trades and oracle

Anchor  [5]

Monetary measurement unit

None

None

Dual coin

Oracle

Rights and permissions

Reprints and permissions

Copyright information

© 2020 International Financial Cryptography Association

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Moin, A., Sekniqi, K., Sirer, E.G. (2020). SoK: A Classification Framework for Stablecoin Designs. In: Bonneau, J., Heninger, N. (eds) Financial Cryptography and Data Security. FC 2020. Lecture Notes in Computer Science(), vol 12059. Springer, Cham. https://doi.org/10.1007/978-3-030-51280-4_11

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-51280-4_11

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-51279-8

  • Online ISBN: 978-3-030-51280-4

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics

Search

Navigation