Due to Crypto Regulation Defi Investors feeling safe with Decentralized Stablecoins

Skepticism of authorities towards crypto makes them feel comfortable with the thought of crypto being regulated. On the other hand, crypto regulations will be skeptical for investors or crypto individuals. In this environment of demands and claims for crypto regulations, Defi Investors are uncomfortable using crypto, specially Centralized Stablecoins. For a simple fact that although cryptocurrency might be or might not be regulated, it’s a long-term process. Still, Centralized Stablecoins, which are primarily preferable by Investors, especially DeFi Investors, are most likely to get regulated and controlled because they are not community-driven or organized by the decentralized community. So now DeFi investors are leaning towards the Decentralized Stablecoins because even Crypto will be regulated in the future, they will be last on the list.

Centralized Stablecoins are such currencies of some private chain networks. So the private organization regulates the currencies, either their value or supply, almost everything. For instance, Tether USDT is a stablecoin with the largest market cap, which works on Ethereum Blockchain but is controlled by the owners of Bitfinex. Some stablecoins are also there, not directly controlled by any central organization. Still, they do have some shares or investment of private organizations or any other currency’s backing, making the stablecoin ‘less decentralized’, for example, Dai having 38% of its backing by USDC.

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Now DeFi Investors are leaning towards and taking an interest in decentralized stablecoins like FRAX, MIM (magic internet money), Terra USD, etc. Stablecoins are also cryptocurrencies but with a little bit of different working, making them different from usual cryptocurrencies. Although crypto seems volatile because they are decentralized and neither backed with any existing materialistic assets like gold nor any fiat currency like dollar. But Stablecoins have this unique feature than crypto that they have the backing of any actual existing medium of exchange, be it dollar or any fiat money. For example, USDT is a stablecoin of Tether that trades at $1 because the dollar backs it. Tether is designed in a way that it maintains its value of around $1. Hence even with the many cryptocurrencies, there were in the market, but still, stablecoins have their place. Many cryptocurrencies are now turned into digital assets or a tool against hedging, which is also not bad. Still, it’s different from their origin’s basic idea, which was to make transactions. However, stablecoins can do so.

It’s not an unknown fact that cryptocurrencies’ origin and use have a basic idea of being decentralized. All the individuals, organizations, and investors now have a whole new concept to keep their transactions entirely into their hands with the help of decentralized cryptocurrency. For the existence of Defi systems and other similar kinds of initiatives, they mustn’t be under any control. Neither their means of investment, which is cryptocurrency, in this case, should be in control of any authority or individual.