An Analysis of Stablecoin in Public Blockchain

Abstract

This thesis serves as an overview of the current state of stablecoins. Stablecoin projects have been snowballing since 2019, and there are more than 200 stablecoin projects at the present stage.Stablecoin sits on the application layer and is developed on top of other layers of the blockchain system. Cryptocurrency is designed as one type of digital currency, and stablecoin aims to fix the drawbacks of the initial cryptocurrency design. monetary theories and cryptocurrency trading are discussed to reveal the issue that most cryptocurrencies fail to function as money. Stablecoin aims to fix this issue with a consistent price and elastic supply.The major part of the thesis is to discuss the stability mechanisms and how Stablecoin projects make use of them. Stability mechanisms serve as the means for stabilising the price of tokens at a constant exchange rate to the pegged price. Furthermore, The Market price of cryptocurrency is changing dynamically, which requires regular tuning on the system parameters. The thesis reveals how cryptocurrency reacts to the continually changing market.An oracle system is discussed since it provides the current market price for guiding the future price of the token. Also, statistical data analysis on Stablecoin is conducted with visualisations, which helps to better understand the current states of the stablecoin projects.The final part of the thesis is Anagram, which serves as an original Stablecoin proposal. Anagram (a.k.a Ana) stablecoins can be created directly via the mining process; The Stablecoin production has a direct relationship with the mining difficulty, and it is pegged to fiat money. Also, it supports an elastic supply and provides an entry for currency exchange between the stablecoin and fiat money, which further enhances the price stability. Future work will be focused on system evaluation.