Decentralized finance (DeFi) technology is getting more interesting at a time when the cryptocurrency markets are going through major corrections and a bearish period with no end in sight. DeFi projects have already enhanced the Ethereum network, and their next step would be to provide the liquidity needed to support stablecoins pegged to other assets such as the United States dollar.

If we think of stablecoins as digital assets based on a blockchain network, we can better understand how DeFi can help them run smoothly.

The rise of Blockchain-Based Assets (BBA) in SmartContracts is, for the most part, in reaction to the lack of blockchain-based assets in the Bitcoin economy and the increasing need for a new platform that provides the flexibility to manage contracts between parties. Some, including and Monero, will not fit the standard of a currency exchange nor do they offer a suitable level of trust that can also be expected on the Ethereum blockchain platform.

The development of SmartContracts and the creation of ETH and other crypto assets like ETC is one of the key factors driving such a sharp uptick in ether prices. Ethereum is the prototype cryptocurrency and the first of a long line of alternative cryptocurrencies in the global blockchain network. These alternative cryptocurrencies are aimed to give users the flexibility to be able to earn value and have a stable rate of value supply. The development and the expansion of smart contracts are part of the solution to this problem.

Most stablecoins are ERC-20 tokens that rely on the Ethereum blockchain and network for the purpose of providing sufficient liquidity as they remain pegged to other assets. Since DeFi side chains make Ethereum transactions more efficient and less expensive, it stands to reason that we could see then become liquidity pools for the likes of Tether and USD Coin.

Stability is at the heart of stablecoin tokens, and we all know that cryptocurrency markets are inherently volatile. It would be safer to stablecoin process transactions on DeFi platforms in order to cushion market volatility and enable these specialty tokens to peg as close to their assets as possible.