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What is Stablecoin AMM?


A stablecoin is an Automated Market Maker or AMM is usually the coin in which transactions are processed across the platform. A lot of times what you have to do is come in with whatever currency you have, buy that stablecoin, and from there you can access some of the other features on the platform. What we mean by the other features is that you’re going to be able to buy cryptocurrencies, invest in liquidity pools, or process any other types of transactions that you need that essentially got you to the AMM in the first place.

What Is A Stablecoin Going To Cost?

This is going to depend on the type of stablecoin AMM marketplaces have to offer, and obviously, also the one that you ultimately pick if there are different options on the table. There are stablecoins that are going to be tied down to the value of the dollar for example. In that case, if you enter the platform with dollars you should be able to earn access to a stablecoin that is pegged to the fiat currency without having to incur any real costs. The costs that you may have to be on the lookout for are any fees that a particular platform may charge for a transaction. That depends though, with many of these stablecoins that are pegged to the dollar platforms usually give their users the dollar-for-dollar value to make sure that they keep their balance on the platform in that stablecoin.

When you get a stablecoin that is pegged to the value of another financial asset or a commodity you’ll essentially have to pay the current price of that commodity or get the number of tokens equal to the investment that you make in that commodity. This is the same thing that you would have to “pay” to buy stocks in a company or that same commodity in another marketplace. The main difference that you’ll have with stablecoins is that you do have the coin and you’ll be able to make transactions in that currency. Something you likely would not be able to do if you have a CFD or own a particular stock.

Is There A Particular Type of Stablecoin That I Should Be Looking For?

It may depend on the type of investment that you want to make or the reason why you’re looking to access a decentralized exchange in the first place. For example, if you want to get into a platform to make different types of investments there then you may want a stablecoin that is pegged to the fiat currency that you use in your daily life. That way you won’t feel like your capital is losing value.

On the other hand, if your idea is to buy a stablecoin that is tied down to the value of a commodity, that’s a simple concept as well. Go and look for the stablecoin that is tied down to the value of the commodity that you want to invest in. Don’t make things too hard on yourself.  

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