Those of you who track the crypto market know that, over the past several months, it has generally been tracking the stock market. There was a huge issue with $UST a week ago and, since then, a class of cryptocurrency known as stablecoins has been on everyone’s radar.
For reference: a “stablecoin” is a token that is supposed to represent a specific amount of a trusted (fungible) physical or digital asset. For example, one $USDT is supposed to be collateralized by one U.S. Dollar. Stablecoins are one of the main financial instruments for exchanging cryptocurrencies for fiat currencies (and vice versa).
Now, in the world of DeFi, you can collateralize or “peg” a stablecoin to anything. I laughed out loud when I learned about USDTea, a stablecoin pegged one-for-one to $0.99 cans of AriZona Iced Tea. It is not only financially sound, but brilliant in every way.
Building financial instruments upon the value stored in physical assets is not a new idea; it’s “the” idea. Who wouldn’t love to trade crypto based on the street price of cans of AriZona Iced Tea?
Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.