Written by**:** mayos#3529

Summary of DAO

Introduction :

Beanstalk is a new and decentralized credit based stablecoin protocol that is built on Ethereum, it does not have any collateral requirements so this means that Beanstalk uses credit instead of collateral to create price stability relative to a non-blockchain-native asset,so in simpler terms it is a decentralized, uncollateralized stablecoin protocol, we will talk briefly about the critical point of this project, how to get involved and how does their ecosystem function in the appropriate sections

Terminology / terms to be acknowledged when reading the report :

Problem :

The largest stablecoin by marketcap are centralized the overall stablecoin market valuation is roughly $150B, in a greater crypto market of $2-3T.

• Stablecoins have clearly found product-market fit in DeFi, being used heavily for trading, lending and borrowing. These tokens have cemented their place as critical pieces of the web3 infrastructure and the largest stablecoin my marketcap are centralized,Circle and Tether are centralized entities that hold all of the collateral backing their respective tokens, USDC and USDT. Together they both are responsible for around 70% of the stablecoins in circulation.
• DAI is DECENTRALIZED unlike the other two mentioned but DAI actually suffers from an even worse collateralization problem: it is overcollateralized explanation : you must deposit $150 worth of ETH in order to mint and borrow 100 DAI. This makes DAI even less capital efficient than the 100% collateral USDC/USDT require
• we can conclude 2 things here (kindly press arrow)

Solution/Alternative :

we need a Protocol that can issue a stablecoin that is : (kindly press arrow to downward position)

• Decentralized
• Credit based in other words no collateral requirement