How do stablecoins influence the crypto space?
by Maryna Trifonova, Head of Content at Jax.Network
The cryptocurrency industry has been evolving at a mind-blowing pace creating new forms of financial instruments. The concept of stablecoins isn’t new though, but it still has room for creativity and innovation. Let’s see how the industry has developed and what role stablecoins play now.
The total stablecoin market cap is around $180 billion at the moment of writing. That is roughly 9.5% of the total crypto market cap, which equals nearly $1.9 trillion. It shows us that most of the funds are currently invested in volatile assets such as Bitcoin, Ethereum, and other altcoins. And less than 10% of all cryptocurrencies are actually used as a store of value or a payment method. However, due to recent crypto-friendly regulations and a Russia-Ukraine war, it’s expected that more people will embrace stablecoins as a safe haven for their money.
It goes without saying that stablecoins have lots of advantages. They not only bring stability in today’s volatile world but also offer a safer and cheaper alternative to traditional investment methods. And more importantly, if we look at the initial purpose of the cryptocurrency creation, we can see that it’s a “peer-to-peer version of electronic cash”, which is aimed at eliminating middlemen. So, it automatically allows businesses to process transactions faster and cheaper around the world and governments to collect and distribute taxes more efficiently.
Shaping the new face of DeFi
While major use cases of stablecoins are quite obvious, we would like to focus your attention on new opportunities that DeFi brings. As stablecoins are less volatile, they can lay the foundation for innovative and creative approaches to money management. For example, stablecoin holders can become liquidity providers and earn an APY percentage at well-known dApps. Please note that liquidity staking bears some risks that users should take into account prior to investing their funds.
As Jax.Network created a totally different type of stablecoin, which is backed by energy, it opens a door to new ways of making money. WJAX can be used in multiple ways on the Jax.Money platform. Users can stake our Layer-2 coin at a liquidity pool and receive yield, which will increase with the mass adoption of our blockchain network.
It’s also possible to swap WJAX to localized derivatives such as JAX RUPEE and JAX DOLLAR and then use them as a convenient and safe payment method. Therefore, these coins will automatically be backed by energy too and will be able to maintain their stable value due to a set cost of production. Besides all this, they are also redeemable into their fiat representations at a 1:1 rate.
To sum it up, we would like to point out that blockchain and cryptocurrency is one of the fastest developing industries. What we see now is only the Stone Age, we still have to go through a lot of periods before we reach the stars. However, those who will remain flexible and pay attention to emerging technologies will have a lot of fun along the way.
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