How Does the Use of Stablecoins Reduce Foreign Exchange Risk in Derivatives?
Stablecoins, by being pegged to a major fiat currency like the USD, eliminate the volatility and uncertainty of cross-currency exchange rates for users who primarily operate in that fiat's economy. When a derivative is denominated and settled in a stablecoin, the user's profit or loss is directly measured in a familiar, non-volatile unit of account, simplifying risk assessment.
