TLDR Tech / Crypto
The Collateral Dollar: Stablecoins and the Haircut Channel
Stablecoins create a two-layer dollar claim structure: the base token is the issuer's promise to redeem at par, but the economically significant layer is the second-order liability that a lender writes against the controlled token and that second claim only becomes money-like if another balance sheet is willing to fund it near par without re-underwriting the full collateral chain. The haircut prices the distance between effective token control and reliable conversion into bank dollars, and in stress that distance widens as haircut increases and token price falls together, compressing funding capacity in a reflexive loop. Unlike the classic Eurodollar system, stablecoin collateral chains have no settled dealer-of-last-resort or central bank swap line architecture above the token, meaning full reserves at the issuer are entirely compatible with a broken credit system above it.
Read the full story