Introduction to USDE Cryptocurrency
USDE is a stablecoin, which belongs to a type of cryptocurrency. The key characteristic of stablecoins is that their value is pegged to an off-chain asset (such as the US dollar) to maintain stability through various mechanisms.
Key features of stablecoins:
- Anchor Mechanism: Stablecoins maintain their value by anchoring to an off-chain asset (such as the US dollar).
- Collateral Mechanism: Stablecoins can be maintained by the collateralization of off-chain assets.
- Algorithmic Adjustment: Some stablecoins use algorithms to adjust the supply and demand relationship to maintain stability.
Types of stablecoins:
- Centralized Stablecoins: Typically collateralized by fiat currency stored in off-chain bank accounts, serving as reserves for on-chain tokens.
- Decentralized Stablecoins: Not controlled by any single party, allowing anyone to audit the collateralization of the protocol on-chain.
- Central Bank Digital Currency (CBDC): Issued by central banks and recognized as legal tender, used for large retail and wholesale payments between individuals and banks.
Operation of stablecoins:
- Collateralized Debt Positions: Users lock collateral in smart contracts to generate stablecoins as overcollateralized debt.
