On Stablecoin: Ecosystem, architecture, mechanism and applicability as payment method

Stablecoins have enabled the rapid growth of decentralized payments and the birth of the new generation of payment system with cryptocurrencies and Blockchain technology. However, while some studies have investigated the price-performance or role of Stablecoins, a comprehensive overview focused on the full context, stabilization mechanisms, and payment applicability of Stablecoins is still missing. This paper first summarizes the definition and the current state of Stablecoins and then presents the relative ecosystem. More precisely, after summarizing the system structure and stability mechanism, we discuss its applicability for payment. The overview proposed in this paper represents the most comprehensive summary of research on Stablecoin. We identified that the asset-backed Stablecoins is the most efficient and widely used Stablecoins. On the other hand, the cryptocurrency-backed Stablecoins are currently the most balanced applicable to the original concept of Stablecoins. Again, the algorithm-backed Stablecoins have the most potential for development, though they hesitated without real collateral or deposit reserves and are potentially prone to collapse. Finally, we conclude and present possible future trends for Stablecoins.

Automated summary

Stablecoins have facilitated the growth of decentralized payments and the emergence of a new generation of payment systems using cryptocurrencies and Blockchain technology. However, the existing research lacks a comprehensive overview of Stablecoins that focuses on their full context, stabilization mechanisms, and payment applicability. This paper provides a thorough summary of the definition, current state, and ecosystem of Stablecoins. It discusses the system structure, stability mechanisms, and their applicability in payment scenarios. The study identifies asset-backed Stablecoins as the most efficient and widely used, while cryptocurrency-backed Stablecoins are more balanced in relation to the original concept. Algorithm-backed Stablecoins show significant potential for development but are hesitant due to the lack of collateral or deposit reserves, making them prone to collapse. The paper concludes by presenting possible future trends for Stablecoins.