Opening the Stable Doors: How Stablecoins Look Set to Rewire Global Finance
Stablecoins are quite easily crypto’s greatest utility use case to date. Yes, the far flung prospects of sovereign identity, data security, local community voting, and the ultimate downfall of traditional financial systems (and the power systems that underpin them) are exciting. Of course, alternate value systems like Bitcoin et al are the ultimate end goal. Yet, to date, stablecoins — cryptocurrencies whose value is pegged to existing fiat currencies — are the frontrunner in proving to the mainstream what crypto can do.
In some senses it’s ironic — crypto just emulating the fiat power structures. Yet otherwise it’s obvious. Stablecoins in a fully integrated crypto financial system are just a better form of cash. Safer, more secure, faster, more efficient, and far more liquid globally than fiat could ever be — with ever-evolving utility in the crypto financial space. Stablecoins are infinitely more effective for cross-border payments, remittance, arbitrage liquidity than fiat could ever be — and their use case is only growing.
Stablecoins for Foreign Exchange with Onomy
Onomy Protocol is a dedicated platform for trading fiat-denominated stablecoins that will completely revolutionise foreign exchange (FX) as we know it. A way to reduce the massive inefficiency in current FX markets, help promote cross-border trade, remove the crushingly expensive spectre settlement risk, smooth remittance, and put the cash in everyone’s wallet that they need for their everyday activities all of the time.
All this while reducing friction in the machinery of global finance and helping businesses get ahead in their international investment, helping FX traders find localised arbitrage opportunities that make FX currency swaps fairer and more accurate for everyone involved — from the largest institution to the smallest individual.
The Rise and Rise of the Stablecoin Industry
The stablecoin industry is growing at a breakneck pace. Total stablecoin market cap sits at a whopping $170 billion. At time of writing, daily transaction volumes are a shade under $100 billion. 90% of all stablecoins are USD denominated, with 70% of that accounted for by Tether’s USDT. Tether itself posted an eye-watering quarterly profit of $4.5 billion. They’re nowhere near the only game in town either. Circle’s USDC holds significant market share as an alternative and is rapidly expanding across multiple chains to make crypto payments a tangible reality.
Both Tether and Circle are centralised operators, however, but decentralised stablecoins do exist, prominent amongst them being DAI — which collateralises issuance of its stablecoin through crypto assets provided by the community. Perhaps most interestingly, roughly 70% off all DeFi transactions are made using stablecoin pairings. Not wrapped Bitcoin, not Ethereum or Solana or other blockchain substrate currencies DeFi exists on, but stablecoins issued by and large by central entities. At this rate, we may run into problems with new even less regulated ‘world banks’ than we already had in the first place (sorry Nakamoto) — something legislators the world over looking at, with Tether already signalling it may leave the EU due to the MICA regulation.
We’re also noticing a surge in Euro issuance. EURT (Tether), EUROC (Circle) and Stasis Euro have all seen increases in both issuance and transaction volume. It doesn’t stop there either, with Tether recently announcing their Dirham-denominated stablecoin to cater to the Middle East market. Indeed, stablecoins have seen a particular surge in use cases in places like Latin America and Africa, due to the poor banking infrastructure in these countries. Stablecoins are a godsend to populations whose banking system is otherwise immature and where access to and security of their main fiat currency is not guaranteed. It’s here where blockchain proving its purposes as the first roots of an alternate financial system are really taking hold.
The Need for Stablecoins with Crypto Principles in Mind
If it isn’t obvious by now, stablecoins are not just here to stay, they are set to take over the world. Yet how we handle their reserve-backing, their issuance, their security, and use cases is still important. Centrally issued stablecoins suffer from painful issues of oversight. It’s a licence to print money and, as Tether is proving, a profitable one. It’s essential as we begin using stablecoins more for our everyday online interactions, our invoices, and our payments — that the governance of them is enacted in a way that stays true to crypto’s fundamental principles of decentralisation, permissionless access, and transparency and auditability.
Onomy Protocol, unlike all other stablecoin issuance protocols, won’t just let you mint one denomination of currency, but all denominations. Yen, Renminbi, Euros, Lira — you name it, you got it. Chiefly, it’s a protocol for institutions and FX traders to make the high volume transaction trades they need at the lowest possible margin on the FX markets, but its stablecoins (Denoms) are also good at what all other stablecoins are good at — payments, remittance, cross-border trade, and of course DeFi. They bank the unbanked, and provide a simple method of getting the currency you need directly integrated with the ever-expanding crypto ecosystem as a whole. All Denoms are collateralized by community crypto-reserves, including $NOM — Onomy’s main coin.
How Onomy Provides a New Platform for Stablecoin Growth
The need for a more flexible stablecoin solution at low-margin efficiency and the knock-on exponential effects this can have on the FX market are obvious, and Onomy will be the first to market in providing this solution.
Foreign Exchange is a market that is desperately ripe for innovation, controlled as it is by a few key players who block efficiency in the market as a whole and damage even the largest institutions’ bottom line. Although yes, it is currently possible to swap USDT for EUROC, the expense of doing so on say — Ethereum — damages that margin, and neuters the prospects of a general purpose blockchain being a suitable forum for FX trade on-chain. Onomy, however, is custom-built for that exact purpose — seeking to provide FX traders, institutions, and retail users the fast throughput and low-cost transactions they need to make their trades worth it and to get the currency they need for payments, remittance, lending, and anything else you want — you’re a sovereign individual.
In a decade, stablecoins will be more widely used than cash. We hope that isn’t in the form of government account-based CBDCs, and we hope it isn’t all hinging on the auspices of a few giant private issuers who control the market. Both those future realities have the potential to be worse than the banking system we have now.
Onomy is not only trying to offer a decentralised FX solution apt in efficiency, but also the decentralised, community-led governance of a global reserve bank issuing the quality stablecoins everyone in crypto craves.
