Figure 18.1: NFT Protocol

For the past few years, Ethereum has led this space of DeFi and

NFTs, but lately, there are several other players introduced to this

wild race. Some of the leading ones are Cardano, Solana, Polkadot,

Cosmos, Avalanche, Polygon etc.

18.2 Stablecoins

One of the top reasons for most cryptocurrencies in the world

including Bitcoin to always be criticized is that they are not backed

by any collateral. Starting from the barter system to the digital era,

currency has undergone different forms, i.e., crops, gold, silver,

spices, salt etc. Currency initially has been used as a medium of

exchange and always had an inherent value associated with it. With

paper money, the issue of trust came into picture and banks as well

as governments came forward to establish that trust.

The second issue with crypto is their highly volatile price fluctuation.

Hence, in order to bring the same goodness of cryptocurrencies as

transparency, immutability, trust etc., at the same time, to get rid of

its price volatility and also middleman tips imposed by Banks,

Stablecoins were introduced.

Stablecoins are the new type of cryptocurrencies created through

the same tokenization model; however, they are backed by real

world securities due to which their price remains relatively

unaltered.

As shown in Figure 18.2, Stablecoins can be created with many

different types of collaterals. However, if the value of the collateral

changes, then the price of the Stablecoin too can alter. Refer to

Figure 18.2, as follows: