Decentralization1Decentralization: absence of a single controlling party over the protocol. No Yes Yes Yes Yes Asset Backing2Asset Backing: presence of assets that support the stablecoin's value. Yes No 3In contrast to popular misbeliefs, seigniorage-share based stablecoins are not backed by seigniorage shares. Conditional or Limited 4In contrast to popular misbeliefs, crypto-collateralized stablecoins are unbacked. The collateral is not a reserve. It is collateral for a loan that belongs to the borrower. Yes Yes Lending Independence5Lending Independence: the stablecoin does not require an underlying loan or debt position to exist. Yes Yes No 6A crypto-collateralized stablecoin is created only when a user opens a loan (CDP). Its existence directly depends on that debt position. Yes Yes Transparency7Transparency: public visibility of reserves or positions. No 8Knowing whether a fiat-backed stablecoin is sufficiently backed requires trusting the issuer or auditors. Yes Yes Yes Yes Redemption Rights9Redemption Rights: ability to exchange the stablecoin for underlying assets. Conditional or Limited 10Despite regulation requirements, fiat-backed stablecoin redemption at face value is usually limited to verified institutional partners. Retail users typically must rely on selling on open markets instead. No Conditional or Limited 11A crypto-collateralized stablecoin is a loan note. Only the original borrower can redeem it directly for the locked collateral. Other holders can claim collateral only by bidding during a liquidation event. Otherwise, they must rely on selling on open markets. Yes Yes Leverage12Leverage: ability to create a leveraged position using the model. No No Yes 13Crypto-collateralized stablecoins support leveraged long positions only indirectly. The borrower mints stablecoins and sells them for more of the collateral asset. Yes 14Crypto-backed stablecoins support leveraged long positions directly, through the minting of a separate coin that tokenizes the reserve surplus. Yes 15Tectonic inherits the same direct leverage approach of crypto-backed stablecoins. But, thanks to its greater capital efficiency, it offers greater leverage. Minting16Minting: ability to mint new supply. Conditional or Limited 17Minting fiat-backed stablecoin for fiat at face value is usually limited to verified institutional partners. Retail users typically must rely on buying on open markets instead. Conditional or Limited 18Minting is only possible when the stablecoin's price is above the peg. Yes Conditional or Limited 19Minting is disabled when the reserve ratio is below a threshold. Yes Revenue Sources20Revenue Sources: where protocol income originates. Reserve asset yield (e.g., treasury bills) Seigniorage from new coin issuance above peg Loan interest and liquidation fees Minting/redemption fees Minting/redemption/stability fees Revenue Beneficiaries21Revenue Beneficiaries: who receives that income. Issuing company Seigniorage share holders Liquidators Holders of Tokenized Equity Holders of EquityCoins Capital Efficiency22Capital Efficiency: amount of stablecoin value created per unit of locked collateral. 4 out of 5 stars 23Fiat-backing stablecoins are very capital efficient because the reserve assets are presumably very stable and thus the issuing company can maintain a reserve ratio close to 100%. 5 out of 5 stars 24Seigniorage-share-based stablecoins are the most capital efficient of all because, being unbacked, they don't require capital at all. 1 out of 5 stars 25Crypto-collateralized stablecoins are the most capital inefficient because the collateral surplus must remain locked and idle. 2 out of 5 stars 26Crypto-backed stablecoins are more capital efficient than crypto-collateralized ones because their reserve surplus is tokenized and the reserve surplus tokens can be used freely and productively. Crypto-backed stablecoins are less capital efficient than fiat-backed stablecoins because their reserve assets are more volatile and thus a greater reserve ratio needs to be maintained in order to cushion against crashes in the reserve asset's price. 3 out of 5 stars 27Tectonic is more capital efficient than other crypto-backed stablecoins because its greater resilience against depegging allows it to maintain a lower reserve ratio. Depeg Resilience28Depeg Resilience: ability of the model to prevent depegging or recover from depegging. 2 out of 5 stars 29Although depegging is unlikely because the reserve investments are supposed to be safe, these investments may still fail and cause the reserve ratio to drop below 100%. In such an event, recovery is unlikely. 1 out of 5 stars 30The Terra collapse shows that seigniorage-share-based stablecoins are unable to recover from depegging. 4 out of 5 stars 31The liquidation mechanism allows quick recovery of the collateral ratio if it becomes dangerously low. This indirectly protects the peg. Stablecoins of this kind have already successfully withstood several market crashes. 3 out of 5 stars 32Typical crypto-backed stablecoins maintain a large reserve ratio and are unlikely to depeg. Stablecoins of this kind have already successfully withstood several market crashes. However, if they depeg, recovery is difficult, to the lack of a liquidation-like mechanism. Recovery depends on recovery of the reserve asset or on the willingness of users to redeem stablecoins at discounted rates or to mint reserve surplus tokens at unfavorable prices. 5 out of 5 stars 33Tectonic triggers automatic redemptions for a random selection of users if the reserve ratio becomes dangerously low. This is a liquidation-like mechanism that directly protects the reserve ratio and the peg. However, unlike in liquidations, users receive exactly the amount of reserve assets that their stablecoins were worth, without any penalty. 