Trustless, Permissionless, Non-Custodial Stablecoins in Decentralized Autonomous Organizations (DAO)

Abstract

The benefits offered by cryptocurrencies are a great many: transaction cost and speed, security and transparency, to name a few. Yet, there is also a major drawback represented by their extremely high volatility. Stablecoins offer an ideal solution since they preserve all the advantages of blockchain-based currencies, while reducing considerably the volatility issue. Currently, stablecoins are almost exclusively pegged to the US Dollar and secured by non-crypto assets held in account at custodial institutions. In this article, we present the design of a decentralized organization aimed at issuing stablecoins backed by crypto-assets stored on-chain and pegged to assets different from fiat money. Our model offers several advantages, in particular, it allows the issuance of stablecoins in a trustless, permission-less and non-custodial environment.