<figure class="wp-block-image size-large"><img width="325px" height="183px" srcSet="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/09/21002223/WhyYouCantCollateralizeAMemecoin-375x211.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/09/21002223/WhyYouCantCollateralizeAMemecoin-662x372.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/09/21002223/WhyYouCantCollateralizeAMemecoin-768x432.webp 768w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/09/21002223/WhyYouCantCollateralizeAMemecoin.webp 688w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/09/21002223/WhyYouCantCollateralizeAMemecoin.webp" alt="Why You Can&#x27;t Collateralize a Memecoin" class="wp-image-4016"/></figure>



No … You can’t collateralize the memecoin you just made.



The <a href="https://www.thecoinzone.com/blockchain/explained-liquid-loans-defi-protocol-on-pulsechain" target="_blank" rel="noreferrer noopener">Liquid Loans protocol</a> only accepts PLS as collateral.



And for good reason.



<h2 class="wp-block-heading tablecontent">High Liquidity</h2>



Every stablecoin is only as good as its collateral.



This is why the majority of stablecoins are backed by USD, the most liquid currency in the world. 



In the case of <a href="https://www.thecoinzone.com/liquidloans/usdl-crypto" target="_blank" rel="noreferrer noopener">USDL</a>, it is backed by PLS, the most liquid coin on <a href="https://www.thecoinzone.com/pulsechain/pulsechain-official-guide" target="_blank" rel="noreferrer noopener">PulseChain</a>.



Therefore, in order for USDL to be strong, every coin which is redeemed for PLS, needs to be able to be sold for redemption value.



For example, if a user has 10M USDL, they can redeem that for 10M USD worth of PLS within the <a href="https://www.thecoinzone.com/defi/protocol-owned-liquidity/" data-wpil-monitor-id="780">Liquid Loans protocol</a>. 



However, if they cannot sell that 10M USD worth of PLS on the market without eating high <a href="https://www.thecoinzone.com/defi/slippage" target="_blank" rel="noreferrer noopener">slippage</a>, then the original USDL was not actually redeemable.



That’s why USDL is backed by PLS, and not some memecoin with low <a href="https://www.thecoinzone.com/liquidloans/why-thick-pls-liquidity-pools-help-usdl" target="_blank" rel="noreferrer noopener">liquidity</a> which was created yesterday.



<h2 class="wp-block-heading tablecontent">Security for USDL</h2>



USDL is a premier, <a href="https://www.thecoinzone.com/stablecoins/the-7-tenets-of-a-decentralized-stablecoin" target="_blank" rel="noreferrer noopener">decentralized stablecoin</a> on PulseChain.



It is so strong because of the reliability of the collateral which backs it.



As the native coin of the chain, PLS not only has the most liquidity as discussed above, but it is also the least likely asset on the chain to fail.



If USDL could be backed by any memecoin, then inevitably some of them would be rugpulls.



This would undermine the strength and reliability of USDL, and could leave it open to becoming fractionally reserved.



<h2 class="wp-block-heading tablecontent">The Bottom Line</h2>



Sorry to ruin the party, but <a href="https://www.thecoinzone.com/liquidloans/usdl-is-actually-a-store-of-value-but-only-if-you-mint-it-yourself/" data-wpil-monitor-id="1273">USDL can only be minted</a> from PLS.



USDL is designed to become a robust and decentralized native stablecoin on PulseChain.



Therefore, it must be backed only by the strongest and most reliable coin on all of PulseChain.

Stablecoins Under Siege: The SEC’s New Rules Aren’t What They Seem

How to Earn Yield While HODL'ing PLS

Bitcoin’s Rise: My View From the Trenches

Here's What Happens to LL Users When Prices Rise (Actual Numbers)

No … You Can't Collateralize the Memecoin You Just Made

Here's why you can't collateralize the memecoin you just made in the <a href="https://www.thecoinzone.com/defi/defi-yield-protocol/" data-wpil-monitor-id="370">Liquid Loans protocol</a>.