They warn that 6 in 10 Argentine crypto investors prefer stablecoins: what are they and what are the risks

Stablecoins became central after last week they carried out a crash that dragged down the entire crypto world.

Although talking about his support in recent days, this kind of investment tied to a financial assetlike the dollar, is the favorite of the Argentines who have already taken their first step into the blockchain ecosystem.

According to a study conducted by Focus Market, They are chosen by 6 out of 10 Argentines to protect their savings. Due to rising inflation in the country and the impossibility of becoming dollars as a result of the exchange rate, Argentines began to turn to the world of crypto and mostly chose stable currencies, which complied with the price of the US currency.

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What are stablecoins?

theTo avoid the price volatility associated with the world of cryptocurrencies, stablecoins were created. These are tokens already associated with the value of an asset in the traditional world of finance which can be considered safer, such as “fiat” currency (such as the dollar or euro), than material goods such as gold or real estateor in another cryptocurrency.

There are also stablecoins that are not associated with any other currency, but controlled by algorithms to maintain a stable price.

“Avoiding risk from rising U.S. Treasury bond rates is present both in crypto assets and in the traditional stock market. This escape from danger was in proportion to the Argentine’s capture stablecoins with parity 1 to 1 against the dollar. That is, one neo digital saving modality in green, so they are called crypto dollars in local jargon“, indicated Damián Di Pace, director of Consultant.

But these “cryptodollars” that not only “shelter”, but also offer huge profits, more than 7% per year in hard money shown in recent weeks not as profitable or as safe.

Landslide

Ten days ago, the United States Federal Reserve announced a rate increase and expect that there will be more upward corrections to try to curb inflation in that country, there was a real “trend” in the world of crypto.

One of the three coins with the largest market capitalization, Terra, literally evaporate in a few days. Unlike other stablecoins that have collateral from the physical world behind them, such as DAI or Ether, which are backed by dollars, the Terra project is based on algorithmic collateralresponsible for maintaining the parity of its price and the U.S. currency

a technical failure caused the loss of that parity and caused a stampede of investors: the cryptocurrency went from being worth US $ 100 to operating close to 0.6 cents of dollars In the market they calculate that cWhen it collapsed, more than US $ 50,000 million was lostjust considering this ecosystem.

But since it also caused a real tsunami in crypto, with other digital currencies accelerating their bearish rally, it is estimated that worldwide losses reached $ 200 billion.

According to Chainalasis, Argentina is in tenth of the countries with the highest use of cryptocurrencies in the world. This is not a small fact: for the company Deel, which manages the payment of salaries of freelancers in more than 150 countries, Argentina is the country where there is the largest number of employees receiving their salary in crypto , to avoid dollar volatility and the collapse of inflation.

These investors will no longer switch to other “safer” stablecoins such as DAI, one of the first “decentralized” stablecoins created in 2017, supported by a basket of more than 20 cryptocurrencies -Ethereum, USDC and Bitcoin, among others. – ensuring that, in any case, the circulating value of the DAI is more than 150% of the value of the cryptocurrency basket that supports it.

NE