Understanding stablecoin technology and related security considerations
Peter Mell, Dylan Yaga · 2023
Stablecoins are cryptocurrencies whose price is pegged to that of another asset (typically one with low price volatility). The market for stablecoins has grown tremendously - up to almost $200 billion USD in 2022. These coins are being used extensively in newly developing paradigms for digital money and commerce as well as for decentralized finance technology. This work provides a technical description of stablecoin technology to enable reader understanding of the variety of ways in which stablecoins are architected and implemented. This includes a descriptive definition, commonly found properties, and distinguishing characteristics, as well as an exploration of stablecoin taxonomies, descriptions of the most common types, and examples from a list of top stablecoins by market capitalization. This document also explores related security, safety, and trust issues with an analysis conducted from a computer science and information technology security perspective as opposed to the financial analysis and economics focus of much of the stablecoin literature.