On-chain implications of business-to-business stablecoin credit

Determine the on-chain implications of business-to-business credit involving unbacked stablecoin loans to market makers or trading firms within decentralized finance systems.

Background

The paper discusses a spectrum of credit issuance mechanisms for decentralized stablecoins, ranging from overcollateralized lending to business-to-business (B2B) credit. At the B2B end of the spectrum, stablecoin issuers may provide unbacked loans to market makers or trading firms to generate yield, introducing contextual and extraneous risks beyond programmatic custody.

While prior sections analyze risks and mitigation strategies for programmatic and function-level credit (e.g., liquidation risk, operations risk, cost of borrowing risk), the authors explicitly note that the on-chain implications of B2B credit are not clearly understood, highlighting a concrete gap in current knowledge and inviting further research into how such credit arrangements impact circulating supply and systemic health.