Quotes About Overcollateralized

The second largest class of stablecoins are crypto-collateralized, meaning they are backed by an overcollateralized amount of another cryptocurrency. Their value can be hard or soft pegged to the underlying asset depending on the mechanism.

Crypto-collateralized stablecoins have the advantages of decentralization and secured collateral. The drawback is that their scalability is limited. To mint more of the stablecoin, a user must necessarily back the issuance by an overcollateralized debt position.