Shiv Malik: Crypto Is Too Dependent on Dollars

The introduction of easily tradable, even decentralized, stablecoins has been a godsend for millions of ordinary people.

If America is so precariously balanced between further prosperity and potential disaster, so too rests the fate of the U.S. dollar for the rest of the world.

Just the issue of U.S. Treasury debt issuance alone has had professional money managers warning this month that the U.S.'s reserve currency status is under threat.

There are plenty of other world currencies or other non-USD denominated assets to transfer funds into should the dollar take a serious tumble.

Despite Web 3.0's aim to be both global in reach, and also free of the control of nation states, its fate is still incredibly tied to USD.The crypto ecosystem utilizes the global reserve currency in almost every facet of its user experience.

The most obvious route out of such interdependence would be to adopt euro, yen or yuan backed stablecoins.

Where there are more than half a dozen USD stablecoins with trading volumes regularly above $5 million per day, there are no non-USD stablecoins that can compete at that level.

Why hasn't one taken off as yet? Mariano Conti, formerly of the MakerDAO parish, the group who built the autonomous dollar-pegged dai stablecoin, is better placed than most to explain why their team opted for dollars.

The IMF derives SDR by bundling and carefully weighting five major currencies including the yuan, euro, British pound and the yen.

"The protocol is capable of changing its peg to follow another currency if needed," he said, "Although the process would likely be painful." A better idea is "Issuing another currency, say EuroDai or YenDai backed by Dai." In other words, building on success by supporting a new stablecoin with already existing collateral.