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Pharos
PHAROSlive stablecoin signals

Five ways a stablecoin holds its peg

The mechanism a coin uses determines how it survives stress. These five explainers map each design — what produces the peg, where it tends to fail, and which Pharos signals are most informative when it does.

  1. 01111 tracked

    Fiat-Backed

    Centralized issuers custody dollars in bank accounts and short-term Treasuries; tokens are minted and redeemed on demand.

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    Users send USD via wire or ACH to the issuer; the issuer custodies the dollars in cash, repos, and short-term Treasuries; the issuer mints STBL 1:1 and lets holders redeem at any time.User USDwire / ACHIssuer reservescustodied 1:1STBL mintedredeem any time
  2. 0243 tracked

    Tokenized Treasury

    Regulated funds hold short-duration Treasuries; the token is a fund share that accretes NAV instead of trading exactly at $1.

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    Investors subscribe cash into a regulated fund; the fund deploys into short-duration T-Bills and repurchase agreements; STBL units represent fund shares whose NAV accrues daily from the underlying yield.Investor cashsubscribed via fundT-Bills + Reposshort-duration RWASTBL unitsNAV accrues daily
  3. 0383 tracked

    CDP

    Overcollateralized vaults issue stablecoin debt; positions liquidate when collateral falls below a safety ratio.

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    Users deposit crypto collateral worth more than the debt they want to issue; a vault or peg-stability module mints STBL as debt against the collateral; the position is liquidated if the collateral value falls below the configured safety ratio.Crypto collateralovercollateralizedVault / PSMmint debt vs collateralSTBL mintedliquidates below ratio
  4. 0423 tracked

    Delta-Neutral

    Spot crypto plus an equal short perpetual position adds up to a roughly dollar-stable claim; yield comes from funding rates.

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    Users deposit crypto as spot collateral; the protocol opens an equal-size short perpetual futures position to neutralize price exposure; the funding rate paid by perp longs flows to STBL holders as yield.Crypto depositspot collateralLong spot + short perpdelta-neutral hedgeSTBL mintedfunding-rate yield
  5. 055 tracked

    Algorithmic

    The peg is held by protocol-level mint/burn rules and arbitrage incentives rather than by 1:1 reserves.

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    Users burn a governance token to algorithmically mint STBL; an autonomous mint/burn module defends the peg through arbitrage incentives; the system has no 1:1 reserve backing, so confidence in the governance token is critical.Burn governance tokenalgorithmic mintMint/burn AMOdefends peg via arbitrageSTBL mintedno 1:1 backing