So as I continue my research and due diligence before apeing into any liquidity pools, I have been eyeing up the safer (but lower Apr) options. If I’m not mistaken, providing liquidity for stablecoin pairs seems like one of the best bets in terms of minimizing risk. But as I learn more about the different stablecoins, it seems like each one has its own possible drawbacks. Unfortunately a lot of the info I found was in random comments or other random places, so it’s not super easy to just have all the facts laid out in one place. I was hoping some of you could lay out a simple description of possible risks involved with each stablecoin.
So far I have learned:
USDT – some members/owners of this project are said to have sketchy track records in their past business dealings. Many people question what is actually backing the reserves of tether, and if tether is being truthful about their reserves. Coffeezilla did a great video on tether witch raises many concerns regarding their transparency and reputation.
USDC – Haven’t heard much negative about this one, aside from the fact that it is based in USA, and therefore subject to US laws (possible target for USA regulators)
DAI – I don’t know the technical reasoning for this, but I have read that a sudden sharp drop in ETH price could cause this stablecoin to crash somehow? I would like to learn more about this.
miMatic – a new stablecoin on matic network, not too sure what the advantages or disadvantages of this one are yet, but I’d love to learn. I imagine it being newer than the others might be a negative? I’m guessing less adoption/people holding/using the coin isn’t a good thing?
Any others? I’d love learn about them all!
One more question, I initially thought that going into a pool like USDC+ETH was kind of stupid. As far as I know currently, that would guarantee impermanent loss as one coins price fluctuates while the other stays at $1. Recently I heard that it may be a safer bet compared to going into a pool with two fluctuating assets… But im not entirely sure why this could be the case? Is it just because it’s easier to predict impermanent loss and weigh that against the possible rewards from interest?