Resolv (RESOLV): A new architecture for crypto-native stablecoins

Stablecoins are meant to provide stability in the volatile world of crypto, but many have built-in issues. Take fiat-backed stablecoins — they promise a 1:1 peg to the dollar because they hold real-world assets (RWAs), actual cash or cash equivalents as collateral. The catch? You have to trust that those centralized companies really hold the money within the traditional financial infrastructure, and won't freeze or lose it. It's an off-chain risk that can cause problems, as has happened numerous times in the history of the crypto market.

Then there are algorithmic stablecoins, which try to keep their pegs without real collateral. Instead, they use complex algorithms to expand or shrink supply based on demand. But when the market crashes or becomes volatile, those algorithms sometimes fail, causing a stablecoin to lose its dollar peg — and its users’ trust. Perhaps the most high-profile of these cases involved the TerraUSD (UST) stablecoin crash in May 2022.

Resolv (RESOLV) is a stablecoin protocol that takes a different approach. It backs its stablecoin with transparent on-chain crypto assets, such as Ether (ETH), Lido Staked ETH (stETH) and Bitcoin (BTC). But holding volatile crypto alone isn't stable, so Resolv pairs each crypto holding with a short futures contract. This hedging strategy, known as delta-neutral, aims to balance out price moves so the stablecoin’s value remains steady near $1, irrespective of market developments.

In essence, Resolv combines real crypto reserves with smart hedging in order to offer a stablecoin that's transparent, backed by actual assets and designed to avoid the weaknesses of other stablecoins, both the algorithmic and fiat-backed varieties.

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