Why Stablecoins Are Essential For The Cryptocurrency Ecosystem?
While volatility is nice when you’re looking for an investment and can give you an indication of the risk-reward ratio, it’s exactly the opposite of what you would look for when it comes to building a financial ecosystem. Any healthy financial system is totally dependent on the stability of its currency.
The cryptocurrency world is no different. Known for its volatility, this world started by attracting early adopters, dreamers and investors, but as time passed, it needed some stability to provide crypto traders with an offramp during times of negative volatility and to enable the widespread integration with decentralized finance (DeFi) platforms.
Stablecoins provide an essential solution to this problem, and they have emerged as a foundational part of the cryptocurrency ecosystem over the past couple of years. This is exactly why we at Blindex are building a (Multicurrency) Stablecoin platform.
By providing a way to stabilize the value of cryptocurrency, stablecoins are playing a key role in creating a new financial eco-system, one that can cater to more people, enhance the existing capabilities and bring crypto closer to the “real” traditional world.
Stablecoins are here to stay
Let us explore why stablecoins are so important and discuss some of the key factors that have led to their success.
Stablecoins are already widely used on decentralized finance (DeFi) platforms like Compound, Aave, Curve, and others. They are also often used as a way to move money between different cryptocurrencies without needing an intermediary service like ShapeShift or Changelly. It seems like stablecoins continue to grow in popularity across all types of blockchain networks including, Ethereum, Binance Smart Chain, and RSK Network within their ecosystems.
It’s enough to look at the numbers for one to understand how big of a deal it is: stablecoin supply grew by 388% during 2021, driven by DeFi and derivatives (going from $29 billion at the start of the year to more than $140 billion at the end of 2021 in aggregate supply). Among the reasons for growth in demand and use of stablecoins over the year, are retail traders stashing stablecoins on decentralized finance systems in order to capture attractive yields. The growth of the derivatives market was another tailwind. Most derivatives venues settle futures contracts in stablecoins, noted Paolo Ardoino CTO of Tether.
Stabelcoins 2.0 (AKA Blindex ;)
Here’s the thing: whenever someone mention stablecoins (in plural) it feels like crypto land is full of lots of different currencies, but in fact, most of the stablecoins are just a variation of a USD-pegged token (different chains, different stabilizing mechanisms, but same old USD).
If we really want this market to become mainstream and cater for a global population, we need to make sure everyone can get in and out of a trade using their own local currency.
This is where Blindex comes in. Blindex is building the first-of-its-kind multicurrency fractional-algorithmic stablecoin platform. Driven from the cutting-edge work done by Frax, Blindex stablecoins are partially backed by collateral and the remaining portion is stabilized algorithmically.
Beyond that, Blindex stablecoins are collateralized by BTC & ETH which is adding more decentralization to the mix. And on top of that, the focus of the platform is on creating a multicurrency system that also has high capital efficiency.
Blindex stablecoins are designed to be a new form of money, that is more stable and better suited for payments & commerce than any other cryptocurrency. We have big plans for making the crypto world more stable, but we’re taking it one block at a time.
If you’re interested in learning more about Blindex, join us at our Here and our community channels: Telegram, Discord, Twitter
