1/ Algorithmic stablecoins have exploded over the past year: Dai, FEI, ESD, Basis Cash.

But fewer and fewer people actually understand how these stablecoins work.

So I made a simple visual explanation of the major algorithmic stablecoins. Check https://medium.com/dragonfly-research/a-visual-explanation-of-algorithmic-stablecoins-9a0c1f0f51a0

2/ There are four basic types of stablecoins. First, full-reserve banks, a la Tether. These are centralized, hold all their assets in fiat, and their liabilities should always match their assets.

Think USDT, USDC, BUSD, and all the others.

3/ Then there are full-reserve crypto stablecoins. To create the crypto equivalent, you have to overcollateralize the "bank."

These designs include MakerDAO and Synthetix. (Animation depicts MakerDAO.)

4) Third is algorithmic central banks. These don't allow the stablecoin redemptions, but instead remain stable via open market operations (that is, trading in the market).

The most recent example of this is Fei (depicted). Celo and Terra's UST are similar examples.

5) Finally there is Seigniorage Shares, typified by Basis Cash (depicted) and ESD.

For the full walkthrough and all the animations, read the post! If you're like me and you like pictures, it'll help make sense of the whole space.