How Does the Use of a Dual-Token System Attempt to Mitigate the Death Spiral Risk? ▴ Learn

How Does the Use of a Dual-Token System Attempt to Mitigate the Death Spiral Risk?

A dual-token system typically involves the stablecoin and a second, volatile token (often called a governance or share token). When the stablecoin is below its peg, the system may incentivize users to burn the stablecoin in exchange for the volatile token.

This reduces stablecoin supply and increases demand for the volatile token, aiming to restore the peg.

What Is a “De-Peg” Event for a Stablecoin, and How Does It Affect the Pool?

How Does the Ability to “Mint and Burn” Tokens Facilitate Stablecoin Arbitrage?

What Is the Primary Risk for Liquidity Providers in a Stableswap Pool If One Stablecoin De-Pegs Severely?

What Specific Market Conditions Can Trigger a Death Spiral in an Algorithmic Stablecoin?