What is stablecoin?
Currency is a unit of account for purchasing goods and storing value. It has general equivalence property in practical application and circulates in the market as a measure of value. But the general public’s biggest impression of encrypted digital money is instability. For example, Bitcoin can fluctuate more than 20% a day, and the volatility is too large to maintain a constant value.
In order to solve this problem and to improve the universality and acceptance of digital currency in the real world, the stablecoin as a kind of digital assets of anchoring specific legal tender came into being. Its value lies in the combination of encryption payment network decentralization system, has relatively stable price level.
When the digital money market is instable, the holders can keep the selected stablecoin to play the role of reserve value. In the downward market environment, as long as other digital currencies are converted into stablecoins through currency transactions, the assets can be guaranteed not to shrink and the market risk can be effectively avoided.
HUSD — the solution for stablecoins
At present, there are some popular stablecoins circulation in the market, in order to maximize the value of stablecoin to meet the various trading needs of users, Huobi Global Station provides a comprehensive and integrated solution HUSD.
HUSD is a comprehensive solution for all stablecoins. In this scheme, the Huobi will build a firewall to help customs bear the risk of instability of the stablecoin. The Huobi OTC will open the transaction of HUSD. Its emergence will solve two major problems:
1. Users’ choice between stablecoins.
2. Conversion cost between stablecoins.
When the user recharges a stablecoin, it will be reflected in the account as HUSD. When the user withdraws, he can choose to put forward any stablecoin; when the stock of one stablecoin is insufficient, he can also choose to put forward other stablecoin.
For example, when a user recharges 1 PAX to his account, the account will be represented as 1 HUSD. At this point, the user can choose to withdraw money by TUSD, namely withdraw 1 TUSD (assuming that there are no commission charge for transfer net).
Currently, the HUSD scheme supports four stablecoins: PAX, TUSD, USDC, GUSD. Huobi will continue to focus on stablecoins in the market, constantly improve HUSD standards, totally risk control, incorporate more stablecoins into the HUSD system, and at the same time, assess the stablecoins within the system. If the assessment exceeds the corresponding risk control index, the stablecoin will be stripped from the HUSD system.
Three advantages of HUSD
- Safer and more convenient-to avoid single stablecoin risk, and seamless handover between stablecoins.
- More stable for stored value-the Huobi bears the risk of instability of stablecoin.
- Convert with no cost-remove the commission fee between stablecoin conversions.