Topic · Core Finance & Asset Classes
← All topicsCrypto & Digital Assets
53 articles · 7 checkpoints · 33 deeper reads · 13 reference notes
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A blockchain is a shared ledger that thousands of strangers keep identical copies of, with no one in charge. The hard part is not storing the data, it is agreeing on the order of it, and that is what consensus rules buy.
A stablecoin is a token that promises to be worth one dollar. Nothing about a blockchain makes that true, the peg is held by somebody standing ready to swap the token for a real dollar, and by arbitrageurs who profit whenever the price drifts away from par.
Instead of holding dollars in reserve, an algorithmic stablecoin tries to hold its peg with incentives alone, minting and burning a companion token to absorb demand shocks, a design that has repeatedly collapsed when the incentive loop ran backward.
An automated market maker replaces a human quoting bid and ask prices with a formula and a pool of tokens, trade against the formula, and the price moves mechanically as the pool's balance shifts.
A blockchain can only natively understand its own assets, so moving value from one chain to another means locking it up on the first chain and minting a synthetic IOU on the second, and that IOU is only as trustworthy as the bridge that issued it.
A perpetual future never expires, so it needs a different trick to keep its price glued to spot, a periodic payment between longs and shorts called the funding rate, and that payment is the single most watched number in crypto derivatives.
Bitcoin miners are running a commodity business with electricity as the input and block rewards as the output, and hashprice, the dollar revenue per unit of computing power, is the single number that tells you whether that business is profitable.
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