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Incentives of Stablecoins on Bitcoin – Bitcoin Magazine

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Incentives of Stablecoins on Bitcoin – Bitcoin Magazine

Since the announcement of the Taro Protocol by Lightning Labs, the subject of stablecoins issued directly on the Bitcoin blockchain has once again become the center of conversation. In reality this is not something new. Tether, the first stablecoin, was originally issued on the Bitcoin blockchain using the Mastercoin (now called Omni) which enabled other tokens to be issued on the Bitcoin blockchain. Stablecoins literally started on the Bitcoin network, but due to the constraints of the block size limit and the paid event in 2017 they migrated to other blockchains. It started with Ethereum, then proliferated into more centralized and cheaper fee blockchains over time. Ultimately, centrally issued stablecoins are centralized, and no matter how decentralized the blockchain you issue them on, their value ultimately derives from the ability to redeem them from a single centralized entity. who can refuse to do so. That is, their issuance on a decentralized blockchain is complete theater in the sense that it does nothing to decentralize the stablecoins themselves; the only advantage to doing so is the ease of interoperability with the native elements of this blockchain.

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