Stablecoins Got HOT Real Fast 🔥

For the past year I’ve been thinking only about stablecoins — cryptocurrencies pegged to the dollar, euro, etc. As a native-Venezuelan, this topic is of personal interest to me, as it should be to anyone interested in the adoption of decentralized money. The amount of knowledge in the ecosystem about stablecoins and how they operate remains limited and we need more community engagement and education.

Ten years after Bitcoin, people continue using unsound money that can be confiscated, censored and inflated away. The jolt of decentralized internet money was felt around the world, followed by a rush of market speculation and irrational exuberance before bridges to onboard users got cemented or guidelines placed. We must pick and shovel right from where we left, with familiar and stable currencies used locally, standing right at the gateway to a frictionless and truly global market.

Stablecoins were long relegated as just another tool from the crypto trader’s toolbox — not profitable to build. Yet the market has realized their potential as cash for the decentralized Internet economy, to save, transact and account. At the beginning of 2018, there were less than 50 stablecoin projects and less than a dozen were live and trading; today there over 200 stablecoin projects and 50 trading. New projects are popping up every other week with different use cases and target markets.

Stablecoins were surprisingly hard to explain to people outside of the cryptocurrency space until today. With Facebook’s Libra stablecoin announcement, the stakes have been raised, and spreading the gospel will become easier. Yes, Facebook will issue tokenized dollars, brace yourselves.

Libra, at a glance, looks like another digital form of payment, like Venmo or PayPal. But it is not, it is a stablecoin, with 100 initial founding members acting as nodes. No, it is not fully decentralized yet. Yes, it is being built with decentralized ledger technology (DLT), aka blockchain, aka cryptocurrency.

This is big for the cryptocurrency space, it is a nod to the validity of the technology, and in particular for the ecosystem of stablecoins. As the cryptocurrency market has matured so has the need for a stable ladder or passage into the decentralized internet money. This is what stablecoins are great for. There are now over us$ 80 bn in trading volume of a variety of so-called Stablecoins in cryptocurrency exchanges. With Facebook’s stablecoin soon launching, the stakes have been raised. And Facebook is not the only elephant in the room, Goldman Sachs, JPMorgan and more have skin in the game.

As tokenized currencies (dollars, euros, yuan, pesos, etc etc) they enable anyone to trade globally without middlemen, and are being used for lending/borrowing, payments, asset tokenization, and community on-boarding. This was Bitcoin’s selling point, P2P cash, and indeed it has given birth to it. The infrastructure is here today for stablecoins to take over and continue developing.

However, the stablecoin ecosystem is not interconnected, liquidity is fragmented and confusion abounds. If I have a “digital dollar” from issuer A and B, why are they not traded and accepted everywhere equally? Consumers and businesses won’t use a payment method unless it is used and accepted by most people. Even Facebook, with their 2.7 billion users, needs to interconnect to the larger ecosystem to drive adoption.

This is fundamental and precisely what we aim to build at CementDAO: an interoperability layer to simplify and decentralize the exchange of currency-pegged coins, operated by a decentralized autonomous organization (DAO) and Futarchy market.

The community will whitelist the best stablecoins with the same peg so they can trade at par with each other and create an interoperable mix of shared liquidity and global acceptance. The project is called Cement because it binds stablecoins to issue decentralized, less risky and ubiquitous dollars provided by competing stablecoins. If you hold TUSD and want to pay someone who only accepts DAI or Libra, you should be able to do that through our system in a trustless way. Our mission is to catalyze a decentralized market economy by facilitating the global use of USD, Euro, Peso or Yuan in crypto, without users ever knowing or worrying which stablecoin is in the background.

This is a call to action: If you care about mainstream adoption of decentralized moneys, we encourage you to signup on our site to learn how you can help us pour cement and pave the way to solid foundations. The technology, community, governance and educational areas all need the support of stakeholders in the stablecoin universe. Ten years after bitcoin, it is time to build concrete foundations for the decentralized internet, else that future may never come.

You can learn more about them stablecoins in general on my blog here.
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