The SDR, and the Rationale for a Multi-Currency Peg

The purpose of this analysis is to share Terra’s approach to creating a price-stable cryptocurrency (stablecoin) for global adoption. Specifically, we solve for an optimal composition of currencies that will comprise Terra’s currency peg. Since Terra is a new stablecoin, it makes sense to first begin by drawing understanding from the practices of fiat monetary regimes and then applying this knowledge to cryptocurrencies. We then solve for an optimal currency basket to comprise the peg, resulting in Terra’s decision to peg its protocol stablecoin to the International Monetary Fund’s Special Drawing Rights (SDR).

Do you have any questions about the SDR or other related topics? Please feel free to ask!

Hi Evan,

The implementation of SDR in crypto is very impressive. By exploring on the Terra mainnet, I found an address that holds 1 billion SDT and that will release 100 million SDT each year. Can you explain why you set 100 million SDT to be released each year? It seems like an arbitrary number to me. And could you tell me where do the 100 million SDT, which already released on April 24, released to?

Thanks,

Hey @Winter this doesn’t really seem to be a research question, so suggest you move it to our discord group. Moreover don’t think this is relevant to the topic of the original post, which is selecting an asset to peg Terra to. Cheers!