The original stablecoin, DAI, used since 2017 by a lot of people living in countries ravaged by horrible inflation cannot be taken away.

It can just be a smart contract with overcollaterised crypto backing it. And the idea is kind of genius.

All the USDT and USDC which appeared later on a just "proxy" for "real" dollar hold by Tether or Circle. There is nothing permissionless or decentralized about them.

So "stablecoin" can mean very different things in practice.

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lxgr 4 hours ago | parent [-]

DAI (now called USDS) is largely backed by assets well within reach of US financial regulators these days, no? Even a few years ago, it was mostly backed by USDT and USDC, which both can be frozen by their respective issuer.

I don't think any of the non-custodial stablecoins had a very good track record even just in the medium term. Overcollateralized crypto-backed stablecoins are exposed to the market value risk of their backing assets; algorithmic stablecoins have had a tendency to death spiral.

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sunshine-o 3 hours ago | parent [-]

Yes.

So DAI is a distinct system from USDS. The relationship is the creator of DAI is the same as USDS and I believe his new organisation maintains the legacy DAI contract and system.

If I remember correctly, the DAI model was beautiful:

- Instead of getting your DAI from an exchange, you could deploy your own instance of a vault, lock your ETH as collateral in it and mint DAI.

- So it was not a unique vault for every DAI but you could choose your collateral assets from an authorized list for your own vault.

I am not sure if in the case of a collapse of USDC and USDT you would have been the only one able to close your own vault and get back your good collateral assets...

Those "decentralised" stablecoins are complex and feel like they had to start from a blank page and create USDS to stay relevant in a more competitive and regulated crypto world. For example USDS has the mechanism to block it for specific holders (like USDC and USDT) but it hasn't been activated as far as I know.

This is why when there is a hack ETH, BTC and DAI are used because they are the "better" money...

In the end I agree, if you can back a decentralized stablecoin with a centralized stablecoin, how good is that system really?

The best stablecoin is the one you deploy a vault for, back it with over-collaterized (anywhere between 3 and 10x) uncensorable cypto (like ETH) and are the only one who can close the vault unless it get liquidated.

	▲	lxgr 2 hours ago \| parent [-]
		That's a beautiful model only on paper. In practice it didn't quite work out, DAI has several times broken its peg (often upwards, but that's still a problem), and they switched to backing it with more and more traditional stablecoins for stability. This was all before the rebrand to USDS. > Instead of getting your DAI from an exchange, you could deploy your own instance of a vault, lock your ETH as collateral in it and mint DAI. Most people that might want to use stablecoins don't have any suitable collateral lying around, so they're dependent on being able to buy or sell it at par. If that peg breaks, the utility of the stablecoin decreases.