Viewpoint: Building a Native Stablecoin for the ICP Ecosystem

Stablecoins on Public Blockchains

In every public blockchain, the coherence of the economic system is crucial. This implies that a public blockchain needs to establish a self-sustaining closed loop, which includes the native blockchain token (used for gas fees, such as ICP in the ICP ecosystem) and stablecoins (used to maintain horizontal connections among various businesses within the entire economic system). While there are various stablecoins in the cryptocurrency market, societal governance still primarily revolves around national fiat currencies. Therefore, stablecoins on every public blockchain largely need to benchmark against the most widely accepted and largest-scale stablecoin in the real world — the US dollar. Although there are stablecoins pegged to other fiat currencies, such as the Chinese yuan, the dominance of stablecoins pegged to the US dollar is evident in the overall cryptocurrency market size.
Note: According to data from The Block, the market size of USD-pegged stablecoins has reached $145 billion, while stablecoins pegged to non-USD fiat currencies are less than $700 million, and stablecoins pegged to non-fiat currencies (primarily gold) have a market size of $900 million.

Every Public Blockchain Needs its Native Stablecoin

In today’s rapidly evolving cross-chain landscape, the interoperability of assets across different public blockchains has become increasingly convenient. Take USDT, one of the largest stablecoins, developed and maintained by Tether Limited, for example. It has been successfully deployed on over 10 public blockchains including Ethereum and Tron. However, while the circulation of the same stablecoin across multiple public blockchains brings convenience to users, it also poses a series of potential risks. Technical, operational, or financial issues may lead to fluctuations in existing stablecoins, thereby triggering a chain reaction across the interconnected public blockchains.

To mitigate these potential risks, we strongly advocate for each public blockchain to have at least one stablecoin, and at least one of them should be native:
Diversification reduces systemic risk
Introducing more than one stablecoin, including at least one native stablecoin, helps to reduce systemic risk. In a diversified system, public blockchains will not overly rely on a single stablecoin, thus better maintaining stability in the event of issues with one stablecoin.

Advantages of native stablecoins
Native stablecoins exist independently on each public blockchain, unaffected by other chains. This independence not only enhances the overall system’s resilience to risks but also provides users on specific chains with a more direct and efficient stablecoin trading experience.

Mitigating the potential hazards of risk transmission
As assets flow across various chains, risk transmission becomes a significant concern. Each public blockchain having its native stablecoin can mitigate the potential hazards of risk transmission between chains, ensuring that users on specific chains are better equipped to withstand the impact of external risks.

Promoting the healthy development of ecosystems
Each public blockchain has its unique characteristics and communities. Native stablecoins help better serve the specific needs of users on particular chains, promoting the healthy development of ecosystems. By introducing native stablecoins, we provide users with more choices and create more opportunities for the uniqueness of each public blockchain.

In building the ICP ecosystem, we firmly believe that introducing diversification and at least one native stablecoin is crucial. Such a design not only helps reduce systemic risks but also provides a more robust, healthy, and independent public blockchain ecosystem. We remain committed to driving the development of the ICP ecosystem, offering users a safer, more flexible, and diversified digital asset trading experience.

ICP Ecosystem Needs its Own Stablecoin

The ICP ecosystem is currently in the early stages of rapid development, and the absence of other chain-based stablecoins has become a barrier to growth. This situation creates liquidity bottlenecks for ICP applications internally as they lack a native stablecoin that aligns closely with the ICP ecosystem.

Challenges in Ecosystem Development
The flourishing growth of the ICP ecosystem is hindered by insufficient liquidity, posing a significant challenge to the rapid development of applications. Currently, applications within the ecosystem face a series of technical, operational, and market challenges when migrating other chain-based stablecoins, affecting their effective operation within the ICP network.

Impact of Cross-Chain Assets
Meanwhile, we observe that two of the most consensual digital assets in the blockchain industry, Bitcoin and Ethereum, have successfully deployed cross-chain into the ICP network. This lays the foundation for creating a native stablecoin in the ICP ecosystem, collateralized by BTC and ETH and benchmarked against USDT. Such a stablecoin, built on top-tier digital assets, will leverage the widespread recognition and market position of these two cryptocurrencies.

Conditions for Creating a Native Stablecoin
Collateralized by BTC and ETH and benchmarked against USDT, the creation of an ICP native stablecoin is a crucial step in line with current trends in the digital asset industry. This design draws on the most consensual digital assets in the industry while incorporating the unique characteristics of the ICP ecosystem, laying a solid foundation for future development.

Introducing a native stablecoin into the ICP ecosystem is a key step in promoting the healthy development of the ecosystem. These efforts will provide applications on the ICP network with more stable, efficient, and sustainable liquidity support, contributing to the long-term prosperity of the ICP ecosystem. We will continue our unwavering efforts to fulfill the commitment to building a robust and stable native stablecoin for ICP.

Our Commitment to Building a Native Stablecoin on the ICP Ecosystem

With our team’s extensive experience in traditional finance sectors such as banking, securities, insurance, combined with years of expertise in the blockchain industry, we bring professional wisdom and innovation to the ICP ecosystem. We firmly believe that by collateralizing with ckBTC and ckETH, benchmarking against the US dollar, and providing outstanding liquidity and clearing mechanisms, we can create an excellent liquidity platform for the ICP ecosystem.

Team Expertise and Strength

Our team members possess senior industry experience in traditional finance sectors such as banking, securities, insurance, providing a strong foundation for creating outstanding products in the blockchain industry. We have a deep understanding of financial market rules and technical characteristics, coupled with unique insights into the blockchain domain, enabling us to better meet user needs.

Features of the Liquidity Platform

Our liquidity platform utilizes ckBTC and ckETH as collateral, designed to achieve stable benchmarking against the US dollar. We prioritize providing users with top-notch liquidity and clearing mechanisms to ensure the efficiency and stability of the platform’s operation. Our liquidity platform also adopts a zero-interest policy, where users only need to pay a one-time fee to enjoy flexible, stress-free lending services.

Stablecoin: Dominance of CUSD

In our constructed liquidity platform, CUSD plays a central role as the primary stablecoin. With CUSD as the link, we are committed to injecting stronger economic vitality into the ICP ecosystem, providing users with trusted, efficient, and zero-risk digital asset lending services.

Our commitment is not only to build a native stablecoin for the ICP ecosystem but also to construct a liquidity platform with a strong team background and innovative capabilities. Through our efforts, we will drive the prosperity and robust development of the ICP ecosystem, creating superior and safer digital asset services for users.

Envisioning the Future

In our strategic planning and team discussions, we always uphold the vision of the future digital finance era, striving to build an ecosystem that adapts to the increasingly mature industry. While we currently choose BTC and ETH as collateral, benchmarking against the US dollar, we are confident in the future and focus on two potential scenarios.

Diversified Collateral Support

As the blockchain and digital asset markets continue to evolve, we anticipate the emergence of more credible and larger-scale digital currencies in the future. We plan to expand our horizon beyond BTC and ETH to include other digital assets, providing users with more choices and diversifying the range of collateral. Such measures will further enhance the platform’s flexibility to meet users’ diverse collateral needs.

Decoupling from the US Dollar Trend

In the rapid development of the digital world, we also note the possibility of emerging stablecoins decoupled from the US dollar in the future. This trend signifies that the digital ecosystem will gradually surpass the constraints of traditional financial ecosystems, forming a more independent and globalized economic system. As the CLP project, we fully consider this trend and are willing to evolve in sync with the market, continually adjusting our strategies to ensure that our liquidity solution platform keeps pace with the times.

Continuous Innovation to Serve Users

In the vision of the CLP project, we aim not only to build a liquidity platform for digital assets but also to provide users with consistently excellent service. We will closely monitor market dynamics, adjust platform strategies promptly, innovate, and meet users’ needs for innovation and efficient service. In the future, we promise to actively participate in and lead the transformation of the digital finance era, creating a superior liquidity solution platform for users.