Analyzing Algorithmic Stablecoins Exploits

Stablecoins are digital tokens that are pegged to a fiat currency’s value, typically the US dollar. There are three broad categories of stablecoins: fiat-backed, crypto-backed and algorithmic stablecoins. 

One type of algorithmic stablecoin is the seigniorage shares stablecoin. When it trades above $1, more stablecoins are minted and distributed. When it trades below $1, more stablecoins are burnt in exchange for shares tokens, which can be redeemed for the stablecoin when it rises above $1 again. The term “shares” is used loosely in this context as it would be more accurate to call it seigniorage bonds stablecoins under certain contexts. The differences have been explored in a previous research piece.