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Curriculum·Graduate·G601

Stablecoin Mechanics and Issuer Risk

Binance USD (BUSD), February 2023. BUSD was a dollar stablecoin issued by Paxos, fully reserved and regulated, and by that month one of the largest in the world.

Taught in G601-01 ›Source ↗

Start with lesson 14 lessons · about 2.2 hours · free account to read in full

Lesson 1 opens on

Binance USD (BUSD), February 2023

BUSD was a dollar stablecoin issued by Paxos, a regulated New York trust company, and it was fully reserved: every token was backed by dollar-equivalent assets a holder could redeem. By early 2023 it was one of the largest stablecoins in the world, with a market value on the order of 16 billion dollars. In February 2023 the New York Department of Financial Services ordered Paxos to stop minting new BUSD, and the Securities and Exchange Commission signaled it viewed the token as an unregistered security.

Read it in G601-01 ›The source ↗

The lessons

  1. G601-01What a stablecoin promises, and who can revoke itState the two-part promise of a fiat-backed stablecoin: par value and redemptionabout 32 min · opens on Binance USD (BUSD), February 2023
  2. G601-02Reserves, redemption, and the runExplain that redemption in a run is met from liquid reserves, not from total reservesabout 32 min · opens on Real USD (USDR), October 2023
  3. G601-03How a peg is actually heldDistinguish exogenous collateral from endogenous collateral tied to the coin's own ecosystemabout 33 min · opens on Neutrino USD (USDN), 2022
  4. G601-04The freeze switchExplain that a centralized stablecoin issuer can freeze specific tokens at specific addressesabout 32 min · opens on Circle's USDC freeze after the Tornado Cash sanctions, August 2022