Quarterly Mark December 2023 - 80

EXHIBIT 3 (continued)
Stablecoin Snapshot
Custody
and
Name
Paxos
Standard
Ticker CollateralLaunched
PAX
Fiat
backed
Reserves
Background Developments
2018 Bank Paxos Standard is a fiat-backed Stablecoin
created by Paxos, a New York-regulated
financial institution. It keeps a 1:1 peg to
the USD.
Free Model
Paxos does not charge any fee for Paxos'
stablecoin-related services, but third-party
fees might apply (bank, blockchain fee, etc.).
An account incurs a monthly charge of $2 if it
maintains a non-zero balance and has no
issuance or redemption activity for 12 months
or longer.
Whitepaper:
https://www.paxos.com/wp-content/uploads/
2019/02/PAX_Whitepaper.pdf
Ampleforth
AMPL
None
2020
Smart
Contract
Terra
LUNA
Fiat
backed
2019
Bank and
Smart
Contract
Ampleforth is an algorithmically-stabilized
stablecoin that aims to peg its value 1:1 to
the USD by fluctuating the token supply.
It rebases daily at 1:00 pm EST and alters
the token supply depending on its price at the
time of rebase. This mechanism means that
someone who owns 1% of the network will
continue to own 1% even if the supply shifts.
Terra is a blockchain protocol created by
Terraform Labs. It issues fiat-backed
Stablecoins (KRW, USD, etc.), pegged to
multiple fiat currencies while also utilizing
LUNA to ensure its price stability.
The LUNA token is a stabilizing crypto asset
that is algorithmically governed in order to
help maintain the value of stablecoins
issued by Terra.
Ampleforth does not charge any fees.
Whitepaper:
https://www.ampleforth.org/papers/
Terra charges transaction fees to miners ranging
from 0.1-1%. These fees are used to power
the network and ensure price stability of the
various stablecoins within the Terra ecosystem.
Whitepaper:
https://terra.money/Terra_White_paper.pdf
value of the collateral drops below the peg, the collateral automatically will be
liquidated.
Other than transparency and decentralization, another significant advantage
of a crypto-collateralized stablecoin is its flexibility. Users can generate, purchase,
sell, and interact with blockchain-based applications using crypto-collateralized
stablecoins at any moment without the need to contact a specific entity.
The most popular crypto-collateralized stablecoin is DAI by MakerDAO. It is
currently the third-largest stablecoin by market capitalization (over $2 billion) in the
digital asset market.
Algorithmic Non Collateralized
In May 2022, the algorithmic stablecoin project Terra lost its peg and entered
into a death spiral that caused the price to fall more than 95%. The blow-up of LUNA
was the largest failure of an algorithmic non collateralized stablecoin project to date.
Algorithmic non collateralized stablecoins are an innovation that aims to stabilize
the price of a token without requiring collateral. These stablecoins use algorithms to
adjust and balance the circulating supply of the token, increasing the total supply as
the price goes up and vice versa, in order to shift the price of the token toward the
target price. To this point, algorithmic stablecoins have not seen much adoption due
to their token protocols having trouble maintaining price stability.
80 | A Stablecoin Ecosystem Primer
https://www.paxos.com/wp-content/uploads/2019/02/PAX_Whitepaper.pdf https://www.ampleforth.org/papers/ https://terra.money/Terra_White_paper.pdf
Quarterly Mark December 2023

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