Happy Wednesday, everyone! If you missed us last week, it's because we decided we just needed a week away from all of it with everything going on. I hope you took some time too. Honestly, it's just been heavy in the world recently, and we don't mean just the crypto markets, so we are sending you love this week wherever you are, take care of yourself today. Let's get into some web3 nerd stuff.

Quip of the Week

The Latest

To stimulate the economy China is set to airdrop $4.5 million in e-CNY to stimulate the local economy in Shenzhen

We have previously talked about China as not being very supportive of cryptocurrencies so this headline might come as a huge surprise. However, they are very supportive of their own central bank-backed digital currency. This is an attempt from the government to get the country out of the dire economic circumstances following massive lockdowns. This news speaks to the future of stimulus if we embrace cryptocurrencies - no more cheques in the mail! Read more here.

NFT's can help you make your hotel reservation worry-free

In partnership with Pinktada, hotels are working to issue reservations as NFTs (non-fungible tokens) that can be traded through the Pinktada network or used interchangeably at another Pinktada resort. The idea is that when you purchase the NFT, the revenue is guaranteed for the hotel owner but can still be traded through the Pinktada market if travellers need to change their plans.

PoolTogether launches NFT to fund its legal campaign 

This bit of news requires some background. PoolTogether is a service where users can stake cryptocurrency into a lottery pool for a chance to win a weekly prize. They call themselves the "no loss lottery." Anyone can purchase a ticket and has a chance to win. If you lose, your money keeps rolling into the next draw and so on until you win. So you may not win, but the money is technically not "lost." PoolTogether is being sued by a former staffer of Elizabeth Warren (presidential candidate), alleging that this is an illegal form of gambling. Now, PoolTogether is selling NFTs called "Pooly" to help fund its defence. This sounds insane but is actually really important. Every encounter between the law and web3 applications will set a new precedent for how they interact. This particular lawsuit could influence the issue of legal responsibility for decentralized communities.

Deep dive: Stablecoins - What are they meant to do and are they actually accomplishing it?

Ok, so let's kick off with a bit of background on what stablecoins are. Stablecoins are cryptocurrencies where the value is pegged or tied to another currency or commodity. The goal of a stablecoin is to reduce volatility.

Why would someone want to do this? 

While volatility in the cryptocurrency market is what enables people to make large profits, it also is conducive to significant losses. For cryptocurrency to deepen its reach into the market, we need more stable forms of crypto. For example, a stat we mentioned a couple of months ago from SoFi, "36% of workers want part of all of their paycheck in cryptocurrencies". While some people might be comfortable with a salary worth half as much or twice the amount depending on the week, most of us prefer to know what the relative value of what we are being paid will be. There are many applications of stablecoins. Among them, is the ability to establish a global currency independent of government or central banking authorities. This is incredibly meaningful for employees in countries where their currency is not stable and highly devalued compared to the American dollar. For example, in Colombia, 0.00026 of a Colombian peso is 1 USD. If someone were to get paid in a stable coin matched to the US Dollar vs. COP this would make a huge difference in their buying power.

What are some examples of stablecoins?

There are dozens of stablecoins, the chart below from November 2021 shows a table of the most popular stable coins.

How do stablecoins remain stable? 

Stablecoins remain stable in one of two ways. They are either collateralized meaning they are pegged to assets like the US dollar, Ether, or other currencies. The issuers of stable coins back up the coin with the equivalent held in that asset. To think of it in an oversimplified way if TrueUSD is issuing 1 million TUSD then it must have at least 1 million USD in the bank. Other stable coins, use algorithms to manage the supply and demand of the coins regulating their value. They will either sell or stop selling coins to regulate the price.

Are stablecoins really stable?

The meltdown of the famous stable coin TerraUSD has people wondering if stablecoins can really be stable? the honest answer, is we don't know. This is not financial advice but what we can say is based on the market so far we are seeing that algorithmic stablecoins (those that regulate supply and demand) are more volatile. Likewise, stablecoins that are attached to cryptocurrencies which might be quickly sold off when they start loosing value can also be volatile. The safest form of stablecoin seems to be stablecoins collateralized by regulated currencies or collateralized assets.

Want to dive in more?

Something to read

• What are AirDrops and how do they work?

• Stablecoins 101

• Guide to Stablecoins

• What is PoolTogether?

• The importance of new Crypto Court Precedent

Something to do

• Join our Discord

• Have a world-changing idea? Apply for a Gitcoin grant

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