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Stablecoin reserve Meaning

The Stablecoin Reserve is the "Vault" of assets held by a stablecoin issuer to back the value of the coins in circulation. For a "Fiat-backed" stablecoin like USDC, the reserve consists of "Cash" and "US Treasuries" held in regulated banks.

For a "Crypto-backed" stablecoin like DAI, the reserve is a "Decentralized Pool" of ETH and other tokens held in smart contracts.The "Transparency" of the reserve is the industry's biggest controversy. "Attestations" and "Audits" are used to prove to the public that for every $1 stablecoin in circulation, there is at least $1 in the reserve.

If a stablecoin is "Fractionally Reserved" (meaning it has less than $1 in the vault for every coin), it is vulnerable to a "Bank Run" where it cannot fulfill redemptions during a crisis.Modern "Reserve Management" is becoming more complex. Some issuers are now using "Real-world Assets" (like corporate bonds or even "Carbon Credits") as part of their reserve.

This "Yield-bearing Reserve" allows the issuer to make a profit, but it also introduces "Credit Risk." The move toward "Proof of Reserves"-where the blockchain itself verifies the contents of the vault in real-time-is the ultimate goal for the industry, promising a level of "Financial Transparency" that the traditional banking system has never achieved.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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