This NBER working paper on cryptocurrency says stablecoins are such that if they use fiat currencies bills, notes, and bond good will over both the treasury currency stock and public lands of each respective inventory depositary1, but rather fiat currency like USDC and Tether are depositories without as much fiduciary responsibility as stock, as much as that's worth, is nonetheless enforced to be worth more than its inventory ("Money is debt that satisfies Holmström (2015)’s no questions asked principle.").

Unlike unbacked digital assets, like Bitcoin, stablecoins are usually backed by reserves and denominated in fiat currency. Stablecoins were also envisaged to act as a widely used medium of exchange and bring innovations in payment systems globally (e.g., Libra and Diem). Thus far, they mainly facilitate crypto trading by decreasing the risk of getting in and out of trading positions. The [only] advantage of stablecoins over fiat currencies is that stablecoins live on the blockchain and face lower transaction costs of using them as a store of value between trades and allow for faster trading. (Gary B. Gorton, Elizabeth C. Klee, Chase P. Ross, Sharon Y. Ross, Alexandros P. Vardoulakis, Leverage and Stablecoin Pegs, December 2022)

  1. https://www.nber.org/papers/w30796


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