Continuing Insights: A Comprehensive Examination of the Native and Stable Aspects of stablecoin
In our previous article, “Viewpoint: Building a Native Stablecoin for the ICP Ecosystem,” we explored the initial concepts behind constructing a native stablecoin. Now, we will delve deeper into the native and stable dimensions of stablecoin.
Native
Let’s first dissect the concept of “native”. Native goes beyond merely referring to a specific public blockchain, it encompasses multiple aspects:
Native to the mainnet: This implies alignment with a specific mainnet rather than cross-chain interoperability. As the circulation between public chains becomes more mature, it also brings about the transmission of risks. As fundamental tools and infrastructure, stablecoins need to perform native risk management for each chain.
Native to the blockchain, not offline: In the crypto world, there’s a fundamental principle: “Not Your Keys, Not Your Coins.” When you pledge your assets to the bank, they are no longer your own assets.
Native to crypto assets (as collateral): The inception and future of crypto are mutually exclusive with fiat currencies. However, during the current transition period, crypto assets need to be anchored to the US dollar as they aren’t yet robust enough.
Stable
Stablecoins are typically relative to the US dollar, whether through oracles fetching USD prices or by using USD assets as collateral. However, we must also consider the origins of cryptocurrencies like Bitcoin and Satoshi Nakamoto’s critique of fiat currencies. Bitcoin was born to combat inflation and centralized financial systems, which contradicts the ideals of traditional fiat currencies.
When considering stablecoins in the crypto world, we must realize that USD anchoring is merely a historical phase, not the final destination. As the cryptocurrency market evolves, we may see stablecoins native to the crypto world, stable relative to the entire crypto realm, rather than just relative to the US dollar.
When launching a stablecoin project, we need to anchor to the USD while preparing for the future. This is why choosing Bitcoin, Ethereum, or other native blockchain assets as collateral, rather than relying solely on the USD, strategically positions us to maintain a competitive edge amidst the evolving cryptocurrency ecosystem and prepares us for future developments.
about
Crato Liquidity Protocol (CLP) is a decentralized finance protocol built within the Internet Computer Protocol (ICP) ecosystem. Utilizing a zero-interest lending mechanism, CLP aims to provide users with low-cost, efficient, and secure digital asset lending services. Users can borrow the stablecoin CUSD by pledging ckETH or ckBTC, facilitating liquidity for digital assets. Additionally, through a dual-token mechanism (CUSD and CLQT), users can earn additional mining and liquidation rewards. CLP is committed to providing innovative financial tools for users within the ICP ecosystem, fostering the appreciation and circulation of digital assets.
Necessary supplement: In fact, various types of stablecoins are developing at the same time. We discuss the native, stablecoin pledged by large tokens and anchored to the US dollar that CLP focuses on. We are also happy to see cross-chain, different development of staking types and even algorithmic stablecoins has jointly formed a rich and diverse crypto world.
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