Hello,
Today I'm talking about a Stablecoin that is in its inception, this coin will become fully available once Cardano launches Smart Contracts, sometime by the end of this month if all goes well.
What ageUSD consists on?
Many stablecoins are pegged to US dollar by collateralization of USD or in case of DAI, collateralization of various number of coins including stablecoins like USDT also.
AgeUSD wants to be different and was developed for many years, the team behind it has a history of not launching anything unless they believe it's fully tested and bullet proof. Look at ADA and ERGO and you will understand the amount of perfection this guys want to achieve.
So getting back to the point, ageUSD is only collateralized buy two coins ADA or ERGO, you can only mint ageUSD using this two coins. The benefit of this is that you don't have to relly on any kind of shady stablecoin like USDT, both ADA and ERGO are decentralized projects whose governance is stablished by the community.
How do you keep the value pegged to the dollar?
Keep in mind that you have two pools, the most important for minting is the reserve pool, in this pool you can put ERGO or ADA and receive the equivalent amount in ageUSD, the other pool is a common pool also with ERGO and ADA. The catch is, the common pool only lets you mint ageUSD if the reserve pool is fully collateralized, this pool will always have to have exactly the amount of value in USD as the amount of ageUSD in circulation or the algorithm will not let anyone mint another ageUSD. This insures that the amount of ageUSD is always supported by the reserve pool insuring that liquidation will never happen.
Another important thing to understand is that this reserve pool gives exactly the amount of ageUSD you put in the pool lets say in ADA, if you put 1 dollar in ADA you will receive 1 ageUSD, when you take ageUSD and want ADA it will give ADA at the price of ADA in that exact time. This type of pool only gives you the possibility of making some extra money if the price of ADA or ERGO goes up, that's the only way you will profit from this trades, you will profit also some fees for providing liquidity.
Hope you understand how big this coin can be and how it solves some big stablecoin problems.
Best Regards,
Cryptopeach