Stablecoins have been a crucial part of the cryptocurrency realm for years. They have given traders safety during volatility, and today, these coins have emerged as a critical part of decentralized finance (DeFi).
At the moment, Tether and USD Coin are the key players in the market. However, their centralized nature and the constant threat of stablecoin regulations caused them to be replaced by decentralized alternatives.
MIM, FRAX, and UST Become More Attractive
Investors are looking for decentralized stablecoins that help improve DeFi infrastructures. Currently, some of the favorites are TerraUSD (UST), FRAX, and Magic Internet Money (MIM).
Terra is an interest-bearing algorithmic stablecoin and a part of the Terra (LUNA) ecosystem. It’s designed to remain value-pegged with the United States Dollar.
Users who wish to mint new UST must interact with Anchor Protocol and either burn an equivalent value of the LUNA token or lock up ETH as collateral.
FRAX is a first-of-its-kind fractional-algorithmic stablecoin developed by Frax Protocol. It’s backed by collateral, and the remaining coins are stabilized algorithmically.
The story behind FRAX is the growth of its community and the adoption of DeFi within multiple known projects.
Finally, MIM is a collateral-backed stablecoin issued by Abracadabra.Money. MIM comes into existence when a user deposits one of 16 supported currencies in cauldrons that support Magic Internet Money.
Some of the popular tokens users can pledge as collateral include Wrapped Ether, Ether, Shiba Inu, Fantom, and others.