Curve founder: Potential risks of over-collateralized stablecoins may come from government regulation

Michael Egorov, founder of decentralized lending platform Curve Finance, believes that the potential risks of over-collateralized stablecoins are not necessarily the reserve-related risks that investors generally notice, but the geopolitical risks brought about by government regulation. Egorov said in an interview that the underlying assets that support collateralized stablecoins, including cash deposits at financial institutions and government securities such as U.S. Treasury bills, are vulnerable to asset freezes and seizures. He pointed out that these potential sanctions can be addressed by achieving maximum decentralization through algorithmic stablecoins, which do not rely on physical cash deposits or short-term cash equivalents: "If you have something that is completely decentralized, then it's just software running autonomously on the chain, so you can't really do anything with it, and in principle it's still fully traceable." "For (dollars), the keys never belong to you. So, that's a problem," Egorov also asserted that truly decentralized stablecoins provide investors with "algorithmic guarantees" that their funds will not evaporate due to asset seizures, while stablecoins backed by physical legal assets lack any such guarantees. (Cointelegraph)