Merge pull request #17 from john-walter-munene/feat/Article-collateralized-backed-stablecoins

Updated original article, deleted duplications

Author: Zahnentferner

…/collateralized-vs-backed-stablecoins.md …acked-stablecoins-holders-perspective.mdpublic/articles/collateralized-vs-backed-stablecoins.md renamed to public/articles/collateralized-vs-backed-stablecoins-holders-perspective.md public/articles/collateralized-vs-backed-stablecoins.md renamed to public/articles/collateralized-vs-backed-stablecoins-holders-perspective.md

@@ -16,13 +16,13 @@ The word “collateral” is often wrongly used and abused in the blockchain and
 
 This meaning can be seen in the following definitions:
 
-*"Collateral in the financial world is a valuable asset that a borrower pledges as security for a loan." — Investopedia*
+*"Collateral in the financial world is a valuable asset that a borrower pledges as security for a loan." — [<u>Investopedia</u>](https://www.investopedia.com/terms/c/collateral.asp)*
 
-*"[Collateral is] valuable property owned by someone who wants to borrow money, that they agree will become the property of the company or person who lends the money if the debt is not paid back." — Cambridge Dictionary*
+*"[Collateral is] valuable property owned by someone who wants to borrow money, that they agree will become the property of the company or person who lends the money if the debt is not paid back." — [<u>Cambridge Dictionary</u>](https://dictionary.cambridge.org/us/dictionary/english/collateral)*
 
-*"Collateral: property (such as securities) pledged by a borrower to protect the interests of the lender" — Merriam-Webster Dictionary*
+*"Collateral: property (such as securities) pledged by a borrower to protect the interests of the lender" — [<u>Merriam-Webster Dictionary</u>](https://www.merriam-webster.com/dictionary/collateral)*
 
-*"[C]ollateral is a borrower’s pledge of specific property to a lender, to secure repayment of a loan." — Wikipedia*
+*"[C]ollateral is a borrower’s pledge of specific property to a lender, to secure repayment of a loan." — [<u>Wikipedia</u>](https://en.wikipedia.org/wiki/Collateral_(finance))*
 
 In the cryptocurrency space, however, the word “collateral” is often misused to refer to any assets deposited or locked into a smart contract, even if there is no loan involved. Considering that this is not a common word in ordinary life, it feels like slang that people (mis)use indiscriminately to indicate to each other that they are part of the crypto subculture.
 
@@ -48,4 +48,8 @@ In a Crypto-Backed Stablecoin, there is a reserve backing the stablecoin. Users
 
 The stablecoin, in this case, gives the holder a right to redeem it at any moment for a portion of the reserve. This right is transferable. If Alice mints some stablecoins and then sells them to Bob, Bob willl have the right to redeem them.
 
-A primary use case for this type of stablecoin is to protect against the risk of falls in the price of the underlying asset. If a user believes that the underlying asset’s price will fall, the user can sell the underlying asset for stablecoins, by interacting directly with the contract. The use case of a leveraged long position is also supported, but through the purchase of reservecoins (see: [<u>An Overview of Djed Reservecoins</u>](https://medium.com/djed-alliance/an-overview-of-djed-reservecoins-benefits-risks-and-more-5e12b9dbf410)).
+A primary use case for this type of stablecoin is to protect against the risk of falls in the price of the underlying asset. If a user believes that the underlying asset’s price will fall, the user can sell the underlying asset for stablecoins, by interacting directly with the contract. The use case of a leveraged long position is also supported, but through the purchase of reservecoins (see: [<u>An Overview of Djed Reservecoins</u>](https://medium.com/djed-alliance/an-overview-of-djed-reservecoins-benefits-risks-and-more-5e12b9dbf410)).
+
+## Conclusion
+
+Although both crypto-backed and crypto-collateralized stablecoins hold an asset in a contract, their mechanisms are vastly, even if subtly, different. Most importantly, from the point of view of a stablecoin holder, crypto-backed stablecoin protocols allow them to redeem their stablecoins at any moment for a portion of the *reserve* directly from the contract, whereas crypto-collateralized stablecoin protocols only allow them to bid the stablecoins for the *collateral* during a liquidation event and they must rely on secondary markets to sell their stablecoins otherwise.