Definition
A Stablecoin is a special breed of crypto token which depends on an underlying asset to limit value fluctuation (i.e. price volatility).
Very few crypto currencies are backed by real world assets. They therefore tend to undergo massive price fluctuations and are predominantly driven by demand and supply. Stablecoins aim to mitigate that problem by being pegged to a real world asset which is held in reserve. The asset in reserve is acting as collateral so that in theory the token always reflects the value of this reserve.
Here are some stablecoins on Avalanche network. USDT.e/USDT, USDC.e/USDC, UST and UST.e etc. However, this does not mean that stablecoins are digital versions of official currencies also know as fiat money. It simply means that the protocol aims to maintain a price peg to the underlying fiat asset (e.g. 1 Coin = 1 UST).The protocol of a stablecoin can be linked to any real world asset, although fiat is the most commonly used reserve.
While fiat currencies are regulated by central banks and their governing bodies, stablecoins are largely unregulated and simply represent a digital protocol that mimics and tokenizes the underlying asset.
Although following the same principle idea, not all stablecoins are created equal. The main difference is in how the protocol defines the underlying reserve asset and the way the peg is maintained. This small yet important detail has encouraged regulators to increasingly assess the situation of stablecoins.
WHAT IS AAVE?
Aave is a decentralized lending platform on Avalanche. The best strategy is yield farming AVAX rewards on Aave by depositing a stablecoin, borrowing against that position, and redepositing the borrowed stablecoin, looping 3–4x to farm the rewards yield.
Trader Joe USDC.e / USDC LP
Trader Joe is a one-stop decentralized trading platform on the Avalanche network. As a DEX, it offers liquidity pools for liquidity providers to provide liquidity and earn swap fees on the pair that liquidity was provided for. By staking the liquidity pool tokens into a farm, liquidity providers can earn additional yield in JOE tokens. The USDC.e/USDC liquidity pool currently offers yielding stablecoin liquidity pools with no impermanent loss.
Yield : 8% (Pool APR + Joe Reward ) at the time of writing..
