ELI5 DeFi
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Fiat Backed

You give me a dollar bill, I give you a token

Trusted custodians hold the value in dollars for each token they mint

Pros

  • Easy to understand
  • Inherent value backing

Cons

  • Centralized control
  • No on-chain guarantees
  • Requires trusted custodian
  • Custodians' ability to freeze your assets

Examples

  • USDC (0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48)
  • USDT (0xdac17f958d2ee523a2206206994597c13d831ec7)
  • TUSD (0x0000000000085d4780B73119b644AE5ecd22b376)