Over the years, the stablecoin race has all but slowed down. With so many options in the market, how does lisUSD differentiate itself from our competitors, and remain relevant?
What is a stablecoin, and what is its purpose?
Stablecoins are essentially crypto assets that achieve a stable value, to act as a digitized form of money. Stablecoins usually peg its value to “real life” money such as the US Dollar or Euro. The methods of stabilizing a stablecoin’s value can vary, depending on the mechanism and collateral used to back it.
For example, USDT and USDC are stablecoins with the highest market share, and are backed by fiat (or real money). Whereas stablecoins such as DAI (MakerDAO), lisUSD (Lista) and LUSD (Liquity) is backed by collateralizing other tokens such as ETH. There are also stablecoins that are not backed by any assets, but rather through a sophisticated algorithm, such as Terra’s UST.
The core idea is that, stablecoins are suitable forms of tokenized money as its lack of volatility allows it to better fulfill the definitions of money, as a more reliable store of value, means of measurement, and medium for exchange, especially when compared to other volatile assets such as ETH, BNB or BTC.
Imagine a bicycle being priced at 1 BNB. However, 1 BNB may change drastically one day to another, and the owner of the bicycle shop will have a hard time keeping track of his financial accounts!
What makes a stablecoin an attractive product?
To understand the competitive advantages of a stablecoin like lisUSD, perhaps we should first examine what makes a stablecoin desirable, and achieve product market fit, as well as how different popular products on the market differ on each factor:
Utility and retail adoption
Have you tried using Japanese Yen, Great British Pound, or Euros in the US, like at a gas station, or a supermarket? If you have tried, you would know that these places would not accept or recognize these forms of money. Foreign currencies such as JPY, GBP and EUR are simply not accepted there to buy daily necessities, and thus, nobody in the US would use them for daily transactions.
Similarly, if nobody uses these currencies, then its value would be questioned. Basically, a stablecoin should have a wide network of retail users in the form of holders, rather than few but several “whales”, to truly function as its core purpose of money. Even some of the existing stablecoin projects with high TVL and trading volume have very few (less than 1,000) holders, indicating concentration of holdings across a relatively few number of users.
Deep and flexibility liquidity options
A key use case of stablecoins is its ability to be easily traded for other volatile crypto assets such as ETH or BNB when needed. Bringing money on-chain and off-chain is always inconvenient for most users. Thus, reserving money in the form of stablecoins has emerged as the solution for users who require a digital alternative to money. Stablecoins can be swapped for other crypto assets on Decentralized Exchanges (DEXes), via various liquidity pools. However, if liquidity is limited, the transaction size that users would be able to undertake would be limited, which can cause frustration for users with larger holdings. Similarly, if users wish to close their trading position and materialize their gains, they might opt for stablecoins with deeper liquidity pools so that they would be more unlikely to be limited by the transaction amount.
Ease of use
DeFi enthusiasts love a good and “sexy” product — but often it can be too complicated for most regular users. With so many competing products out there, having intuitive and easy to understand product design and UI will become a key factor to attracting market share and achieving product market fit. For example, Liquity is simple to understand, and straightforward in design, accepting only ETH as collateral.
Trading Volume
When thinking of stablecoins as money, one of the key principles of money often neglected by the crypto community is “the value of exchange”. Stablecoins without strong trading volume numbers (as a proportion of their current market cap) may indicate deficiencies in its value to be used as a form of exchange.
Is the value stable?
If a stablecoin fluctuates in value consistently, it loses the core value proposition of being a stablecoin. Options like DAI, USDT and USDC are considered reliable, and stable options. The collapse of UST has highlighted the imperative need for reliable, price stability mechanisms. Some stablecoins have opted to be “yield bearing” or “interest bearing” — which would imply that the value is expected to inflate over time.
Other key considerations
There are several other considerations that may be relevant to users. Such as capital efficiency, borrowing fees and the collateral options available for borrowing. Some users also prioritize decentralized options over centralized options. These considerations create further diversity and competitive niches between different stablecoin protocols.
So, what makes LISTA and lisUSD stand out as a top LSDfi stablecoin protocol and product?
lisUSD is designed to fulfill all the necessary conditions outlined above to become a competitive, decentralized stablecoin of choice. However, here are three ways lisUSD particularly stands out.
Fully synergised CDP stablecoin and LSDfi ecosystem
Offering a stablecoin product alone these days is not enough to optimize it. The LSDfi narrative has become a popular bandwagon for stablecoin protocols to join. However, few protocols have a fully integrated LSDfi ecosystem like Lista.
For example, Lista self-manages our own validator node, Synclub, which is consistently a top 5 validator node on the BNB Chain. Synclub also offers regular staking across several blockchains such as Cosmos, Tron and Polkadot, providing highly integrated staking and Collateralized Debt Position (CDP) solutions to users.
Additionally, self-managed validator nodes are often more secure, as we have direct control and management of its operations, providing users a safer and more secure staking experience.
Both our over-collateralized stablecoin, lisUSD, and other native BNB LST, lisBNB, has also fully developed liquidity pool ecosystems on the BNB Chain, with top DEXes such as PancakeSwap, Thena Finance, Biswap DEX and Wombat Exchange.
Stay tuned, as we build our lisUSD ecosystem on Ethereum!
A core mission to make DeFi easier for all users
One of LISTA’s primary goals is to ensure that we deliver not just a smart, but also simple and intuitive experience for users. We have rigorously tested our UI and optimized our product to ensure that beginners in DeFi would also be able to intuitively navigate on our platform. Additionally, Lista is committed to making our products simple beyond just optimizing UI. We will be launching our Lista Academy, which contains key explanatory articles on important topics such as “What is a lending and borrowing”, and “What is liquid staking” — so that we can empower and educate new users in the space.
Additionally, we are also looking to transition our code base infrastructure from MakerDAO to Liquity, which has few total smart contracts, allowing our product to become more streamlined and simple to use.
This might contrast our products against some other similar, but far more complicated and advanced platforms. We hope that our product will make DeFi easier for all users, and this mission also serves as our core slogan.
Flexible liquidity options with sustainable and attractive trading incentives
We are proud to make lisUSD one of the most capital efficient decentralized stablecoin products out in the market, and we will be one of the first few projects to properly incentivize users to trade and exchange our stablecoin, lisUSD. An example of this is our plan to launch an on-chain referral system to incentivize users to borrow and trade lisUSD — stay tuned for these updates!
With a total of over 15m of liquidity on the BNB Chain, lisUSD has emerged as a top decentralized stablecoin option with deep liquidity, offering flexibility for users to trade and store lisUSD. Our presence across top DEXes such as PancakeSwap and Thena Finance also allows users a trusted platform to conduct yield farming on their lisUSD liquidity pool tokens. With most of our lisUSD pools offering APYs of above 10%, lisUSD out competes several other less capital efficient stablecoin products in terms of its yield potential.
What’s more important to understand is that the yield we offer on lisUSD is sustainable, as they are boosted by the revenue we generate from liquid staking our collateral. Every week, the team distributes our liquid staking rewards to various DEXes and pools as part of the APY received by stakers. This way, we are able to sustainably generate real yield and deliver real value to users.
This is relatively advantageous as some other CDP protocols do not undergo liquid staking, or any yield generation actions on their collateral. Lista is able to do this safely, as aforementioned, we self-manage our own validator node, Synclub. Our liquid staking capabilities positions lisUSD as a decentralized stablecoin with various and deep liquidity options, as well as one with attractive yet sustainable yield farming opportunities.
We plan to offer lisUSD liquidity pools on top DEXes on Ethereum very soon — stay tuned to find out how users can trade lisUSD on Ethereum.
Other than yield farming opportunities, Lista will continue to design some dedicated long-term incentives for the community to ensure that the lisUSD becomes the choice stablecoin for trading and exchange, and the top stablecoin choice in the crypto industry in general.
Launch of lisUSD and Ethereum Mainnet
As mentioned in our previous article, Lista will launch on Ethereum Mainnet on 19th December 2023. We hope that this article provides insight to how lisUSD may value-add to the Ethereum ecosystem, and why we believe that lisUSD has the unique value proposition that will propel it to become the number one stablecoin of choice.
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