Original Title: 《Type III Stco
Currently, stablecoins have played two major functions: fiat settlement and Store of Value (SoV). The daily trading Volume of stablecoins has reached historical high a reaching $81 billion, with USDT and USDC capturing over % of the market share in mature and emerging emerging markets. They not only represent simple transactions but also represent financial inclusivity and demand for low-volatility currencies.
However, compared to the Store of Value function, the acceptance of yield stablecoins differs significantly. Despite continuous innovations in the DeFi field, yield stablecoins remain a napplication niche application. a market 10% of the market value of USDT and>US>DC p>, the of stablecoins, the yield execution mechanisms, and ultimately discuss addresses scalability and security issues.
(Note: I have translated the text as requested, maintaining the specific terminology and preserving the <> tags. The translation continues in the same manner for the entire text.)Another key issue is the obsolescence of strategies - no strategy can generate returns above the market indefinitely. When the team chooses a strategy that matches market conditions, they may achieve over 30% of extraordinary returns. However, as the market environment changes, the team's returns gradually disappear or are diluted as the scale expands. At this point, the team must constantly seek new strategies to adapt to market changes.
Second Category: Committee Gaming - Can "Collective Decision-Making" Cure All Ills?
To address the issue of strategy obsolescence, the second category of stablecoins introduces a mechanism of multiple strategies running in parallel. Examples of second-category stablecoins include Maple and Sky (formerly MakerDAO). They establish a committee or decentralized autonomous organization (DAO) that delegates user deposits to multiple yield strategies, including first-category stablecoin teams and banks and market makers from outside the crypto realm. Thus, this model shifts execution responsibility from a single team to a collective decision-making organization.
The main motivation for adopting second-category stablecoins is scalability. If the current strategy cannot generate significant returns or poses high risks, the DAO can decide to switch to a better strategy, thereby providing users with stronger robustness guarantees.
[The translation continues in the same manner, maintaining the specified terminology and preserving the original structure and meaning.]Since third-party operators must obtain the entrustment of re-stakers to lend, the decision-makers of Cap are actually the re-stakers. Re-stakers have the final say on which third parties can enter the protocol and generate revenue.
Re-stakers obtain incentives through the delegation premium provided by operators. Re-staked assets are locked crypto assets with low opportunity costs and low capital premiums. In other words, these assets cannot generate significant returns. Therefore, re-stakers are motivated to entrust these idle values to operators for use. With the power to make decisions, re-stakers are also directly exposed to the results of these decisions, thus they are encouraged to prioritize safety.
It can be noted that Cap's ultimate goal is to become a fully permissionless, minimally governed protocol where operators and re-stakers can participate freely. However, considering the novelty of the design, in the initial stages of the protocol, re-stakers and operators will be certified institutions and will be whitelisted. This provides a safety mechanism for re-stakers as they have ways to reach agreements with each other and pursue legal recourse.
Weighing Pros and Cons
The key advantage of this model is its security. Since decision-makers bear the full risk of their decisions, retail holders do not need to worry about the process of generating revenue. All rules are executed by smart contracts, eliminating the need for human arbitration. This provides retail investors with stronger regulatory protection than traditional finance.
Similar to second-class stablecoins, delays are reduced when identifying and adopting new strategies. The system has no conversion costs when reallocating capital. Unlike second-class stablecoins, capital allocation does not require lengthy DAO and committee deliberations. Each re-staker has the right to individually allocate capital to operators.
However, compared to second-class stablecoins, third-class stablecoins are more complex. This complexity may trigger smart contract risks, as the entire system depends on code to regulate the execution process.
Conclusion: Paradigm Shift is Inevitable
Currently, interest yields are far from reaching the level that can unleash DeFi's potential. As the stablecoin market continues to grow, there will be more interest-yielding stablecoins supported by strategies. But unless a paradigm shift occurs in the basic design of these stablecoins, they will again face similar risks and fatigue, unable to achieve scalability. Therefore, there is an urgent need to develop a more efficient, scalable, and safer system that transcends the limitations of traditional human decision-making and promotes the widespread adoption of stablecoins.
